Chicago Close

29/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.54 1/4, down 13 1/2 cents; Nov 11 Soybeans closed at USD13.57 1/4, down 14 1/4 cents; Aug 11 Soybean Meal closed at USD351.60, down USD3.70; Aug 11 Soybean Oil closed at 55.65, down 11 points. On the week Nov beans were down 41 cents. US weather forecasts are looking far less threatening than they did a week or so ago prompting funds to sell an estimated further 5,000 soybean contracts on the day. The US debt ceiling negotiations drag on and it's all starting to look rather disconcerting. The longer this takes to sort out the more questionable it seems that the US can muster any kind of bipartisan support for dealing with the deficit issue.

Corn: Sep 11 Corn closed at USD6.65 1/2, down 16 3/4 cents; Dec 11 Corn closed at USD6.68 3/4, down 17 1/2 cents. On the week Sep corn was down 24 1/2 cents and Dec fell 16 3/4 cents. Funds were said to have dumped 14,000 contacts on the day as weather forecasts turned more benign. As with beans the US debt ceiling issue is keeping the market very nervous. Confidence was running quite high that something may be resolved be tonight, but that is now starting to look less likely. If, and this seemed like a very large if a week or two ago, but if there is no consensus then exactly how the market will react to a US default is very uncertain.

Wheat: Sep 11 CBOT Wheat closed at USD6.72 1/2, down 20 3/4 cents; Sep 11 KCBT Wheat closed at USD7.67, down 16 1/2 cents; Sep 11 MGEX Wheat closed at USD8.30 3/4, down 16 cents. CBOT wheat was down 19 3/4 cents on the week. US spring wheat potential is declining, but export competitiveness is also. The bullish story relating to US wheat also seems to be losing influence in international circles. Egypt bought 240,000 MT of Russian wheat again today, their fourth clean sweep in succession since the turn of the month. Funds sold an estimated 5,000 CBOT contracts today.

EU Grains Close

29/07/11 -- EU grains finished with Nov London wheat down GBP1.35/tonne to GBP163.65/tonne and Nov Paris wheat EUR2.25/tonne lower at EUR197.75/tonne.

On the week overall wheat managed to post modest gains with Nov in London up GBP2.65/tonne and it's Paris counterpart up EUR4.75/tonne.

Egypt bought 240,000 MT of Russian wheat in it's tender today making that four clean sweeps in a row amounting to 660,000 MT since the lifting of the Russian export embargo at the turn of the month.

Today's purchases were made at around USD255.00/tonne FOB plus freight in the region of USD16.00/tonne. That's still a hefty saving on US and French wheat, although it's up USD10.00/tonne from the prices submitted by the Russians at the beginning of the month.

The stalled French harvest should regain some momentum over the weekend.

At home some very early wheat harvesting has been reported in East Anglia with Cordiale in coming in with proteins of 12.5-13.0, good hagbergs and excellent bushel weights in excess of 80kg/hl, according to my chums at Dalmark.

Rapeseed yields in the UK so far are widely reported as being very impressive with a final output of a record in the region of 2.5 MMT looking likely.

The Week So Far

29/07/11 -- Here's a quick resumé of where we are on the week so far, including overnight/daytime action this morning:

Nov London wheat up GBP3.00; Nov Paris wheat up EUR5.50; Nov CBOT soybeans down 20 1/2c; Dec CBOT corn down 3 3/4c; Dec CBOT wheat up 43 1/4c.

An interesting point raised by this morning is front month September corn closing below new crop December for the first time in almost a year.

It's also noteworthy that Chicago wheat has outperformed everything else this week, clearly on the back of wheat conditions in the US. That market seems to be trying to ignore increased wheat production estimates elsewhere and the ultra-competitive offers emanating out of the Black Sea.

There may be some quality issues surrounding quality amongst French and German wheat when the harvest gets going again this weekend after a week of rain. There are also quality question marks over Ukraine's wheat crop.

That makes it particularly difficult to make out a case for why UK feed wheat prices should mirror the movements of better quality wheats traded in Paris and the US.

Once again I can only attribute this to lack of selling by growers here itching to get stuck into their wheat faced with whatever uncertainty remains over quality and yield. It may therefore be a few weeks yet before we see any "harvest pressure" on UK wheat prices.

The Morning Vibe

29/07/11 -- Harold Wilson famously once said that "24 hours is a long time in politics" (along with "I'll have a quarter of rough shag please"). So we awake this morning full of anticipation to see what has happened with the US debt ceiling issue only to discover that the answer is nothing at all.

Last night's Republican vote was postponed it would seem as House Speaker John Boehner realised that he still didn't have enough support to push his budget deficit-cutting plan through.

So where are we now? Facing another long 24 hour wait for something to happen by the looks of it. Yet the markets seem strangely calm and relaxed about the whole thing as Tuesday's deadline approaches.

Elsewhere the slowest car crash in history rumbles on, Moody's have said that Spain is facing a possible credit rating downgrade, and suggest that the latest Greek bailout hasn't really changed things.

I have to say that I'm surprised by the grain market's ability to largely shrug off these negative vibes, especially in the light of a plethora of "nowhere near as bad as we feared" reports coming in for all over the place now that the harvest is well underway across the northern hemisphere.

Egypt are back to feed at the trough today, looking for an unspecified quantity of wheat. The main point of interest there will be how much cheaper than everybody else Russian grain is likely to be this time round.

Ukraine has harvested 28.1 MMT of grains so far with yields up 22%, according to the Ministry.

August Paris rapeseed goes off the board today.

Chicago Close

28/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.67 3/4, down 8 cents; Nov 11 Soybeans closed at USD13.71 1/2, down 9 cents; Aug 11 Soybean Meal closed at USD355.30, down USD0.50; Aug 11 Soybean Oil closed at 55.76, down 64 points. The weather seems less threatening than last week and weekly export sales were disappointing at at 372,700 MT versus the 550 to 850 TMT expected. "The Midwest rainfall in the past week has been heavy in the Northern Midwest with a weakening dome of high pressure. Over 4 inches of rain has occurred in eastern Iowa, northern Illinois and Ohio, giving corn and soybeans a needed boost," say Martell Crop Projections. The June US soybean crush came in at 124.3 million bushels 0.8 million lower than expected. Funds were given credit for selling around 6,000 contracts on the day.

Corn: Sep 11 Corn closed at USD6.82 1/4, down 9 1/4 cents; Dec 11 Corn closed at USD6.86 1/4, down 5 1/4 cents. As with beans the weather has improved and the weekly corn export sales total was also a let down at 484,500 MT compared to the 550 to 950 TMT expected. "A rash of strong thunderstorms developed again last night in Nebraska, southern Wisconsin and Michigan. It is the best rainfall in several weeks and highly beneficial for corn that is pollinating and setting kernels," say Martell Crop Projections. Further south Tropical storm Don could bring heavy welcome rain for Louisiana and Mississippi in the next day or two before pushing northwards into Alabama, Georgia and the Carolinas Sunday through to Tuesday, they add.

Wheat: Sep 11 CBOT Wheat closed at USD6.93 1/4, down 11 1/2 cents; Sep 11 KCBT Wheat closed at USD7.83 1/2, down 4 3/4 cents; Sep 11 MGEX Wheat closed at USD8.46 3/4, down 4 1/4 cents. The Wheat Quality Council crop tour continues to report lower yield prospects i North Dakota and weekly export sales of 473,800 MT were at the high end of expectations for sales of 300 to 500 TMT. Elsewhere in the world though the news was bearish with the International Grains Council increasing their global wheat crop estimate by 8 MMT, and adding 5 MMT to the 2011/12 ending stocks. Jordan bought 50,000 MT of what was almost certainly Black Sea wheat overnight. Egypt are to tender again for an unspecified volume of wheat on Friday, as with recent tenders US wheat is not expected to feature if price alone is the only consideration.


28/07/11 -- Here's the UK weather forecast for the week ahead from the extremely useful Weather Schools Channel on YouTube. Get the harvest in if you can before next Wednesday I think is the clear message here.

EU Grains Close

28/07/11 -- EU grains finished higher with Nov London wheat up GBP1.50/tonne to GBP165.00/tonne and with May climbing GBP1.85/tonne to GBP172.10/tonne. Nov Paris wheat was up EU4.25/tonne to EUR200.25/tonne whilst May12 rose EUR4.50/tonne to EUR206.00/tonne.

Selling interest was light as producers busy themselves with harvesting, determined not to oversell and in many cases still unsure of the final quality of their grain until it's in the barn.

Apart from those reasons they're weren't too many other bullish stories out there today.

The International Grains Council raised their global wheat production estimate by 8 MMT to 674 MMT and increased their ending stocks estimate by 5 MMT to 190 MMT - only 8 MMT below the "we've got so much wheat we can't give it away" year of 2008/09.

Ukraine hiked their grain harvest estimate to 51 MMT, 30% up on last year, saying that this season's corn crop could hit the 18 MMT mark which is 2.5 MMT more than the USDA currently project.

Romania says that it has harvested 5.8 MMT of wheat so far this year and that the final total could be 6.7 MMT - a million tonnes, or 18%, up on last year.

Meanwhile the EU’s Monitoring Agricultural Resources unit (MARS) pegs the EU-27 wheat crop only down marginally on last season at a fraction over 137 MMT, and sees barley production a million tonnes up on last year at 54.15 MMT. Corn output is forecast at 61.21 MMT. All three combined adds almost 10 MMT of grain to the EU's bottom line this year compared to current USDA projections.

Brussels granted 382,000 MT of EU soft wheat export licences this past week, taking the marketing year to date total to 977,000 MT - a fair total four weeks into the season and slightly higher than where we were this time twelve months ago.

However we've imported almost three times that volume, 2.8 MMT, during the same period whereas twelve months ago that figure was just 365,000 MT.

A revised bill to raise the US debt ceiling goes for a vote at the House of Representatives later tonight. Which means tomorrow could be interesting.

Early Call On Chicago

28/07/11 -- The overnight grains finished mixed with wheat 5-7c higher, beans narrowly either side and corn 1-3c easier.

The USDA's weekly export sales came in with wheat sales of 473,800 MT for wheat (at the high end of expectations of 300 to 500 TMT), corn sales of 484,500 MT (below the 550 to 950 TMT expected) and soybean sales at 372,700 MT (550 to 850 TMT expected).

Nothing too exceptional amongst that lot really, although China showed up buying one cargo of wheat.

The International Grains Council have upped their 2011/12 world wheat production forecast by 8 MMT to 674 MMT and increased their ending stocks estimate by 5 MMT to 190 MMT. Corn production is up 1 MMT and carryover up 2 MMT.

Separately the Ukraine said that they'd end up with a 51 MMT grain harvest this year, a 30% rebound from last season and the highest estimate we've seen yet.

Elsewhere MARS say that the EU wheat harvest will be barely changed at 137 MMT this year, when most private estimates were around 130-132 MMT a month or two ago.

Yet despite all these extra tonnages coming out of the woodwork the market appears to want to try pushing higher this afternoon with London wheat up GBP2-3/tonne and Paris wheat up EUR4-5/tonne.

The June US soybean crush came in at 124.3 million bushels 0.8 million lower than expected, and rain moving across the Midwest today/tomorrow will be welcomed.

The USDA confirm the sale of 170,000 MT of corn to Japan.

Overall there seems to be more bearish than bullish news in amongst that lot, and that's besides the US debt ceiling problem still up in the air, yet early calls don't exactly see the market falling out of bed:

Wheat up 4-6c, corn down 3-4c, beans flat to 2c lower.

Bloody Computers (Again)

28/07/11 -- Here we go again, another rant about bloody computers, and for once Richard Branson isn't to blame. When I say computers, in this case I actually mean routers. With the kids hols upon us I thought that upgrading to a dogs wotsits high speed super fast one was probably a good idea.

It won't surprise you to hear though that it wasn't. So here we are less than an hour away from Chicago opening and what they say will be a ten minute set-up jobbie that I started at 10am is just about complete. Only the new all-singing, all-dancing bloody thing is slower than what we have before. Great.

So now I either uninstall the whole bloody thing and switch back to the old one, smashing my new one into a million pieces just for a laugh or put up with a slug.

There is a third possibility though, every kid in the neighbourhood is battering the hell out of his xBox Live right now and things will return to normal in September when the little sods all go back to school.

Super fast fibre optic broadband my arse. It IS your fault after all Branson. If I ever get to meet you I'm going to kick you up the arse so hard you'll be winging your way across the room faster than anything that your poxy "service" can offer.

Life On MARS

28/07/11 -- The EU’s Monitoring Agricultural Resources unit (MARS) has increased it's EU soft wheat yield forecast "due to the beneficial grain filling phase in Germany, France and United Kingdom and higher yield forecasts as previously for Romania and Poland."

Despite a lower planted area this year EU total wheat production will almost match last season at 137.03 MMT they say, which is 5.53 MMT more than the USDA's current estimate.

Barley output will total 54.15 MMT they forecast, just over 2 MMT more than the USDA. Corn production will total 61.21 MMT, again a little over 2 MMT more than predicted by the USDA.

Add that little lot together and we're set to have almost 10 MMT more grain swilling around in the EU system this season than our chum(p)s across the pond currently predict.

In an incredibly detailed report (you can download it here although it takes thirty seconds or so) they estimate UK soft wheat yields at 7.74 MT/ha, French yields at 6.57 MT/ha and German yields at 7.52 MT/ha.

On an acreage of around 2 million here in the UK that would imply a crop of around 15.5 MMT, more than a million tonnes up on last year.

Out of interest the highest yields in Europe are seen coming from our rain-sodden Irish brethren who will be blessed with an impressive 9.16 MT/ha this year, they say.

Barley yields are seen averaging 5.7 MT/ha in the UK, 5.76 MT/ha in France and 6.09 MT/ha in Germany.

Also of note is they highlight substantially better wheat and barley yields out of habitual importers Morocco and Tunisia this year. Moroccan wheat yields are up 20% on last season and +30% on the five year average, with barley yields up 11% and 41% respectively.

Tunisian wheat yields are seen up 68% on last year and +26% on average, with barley yields increasing by a whopping 235% on last year and +40% on average.

Oh, and by the way, it's on America's tortured brow that Mickey Mouse has grown up a cow.

Chicago Close

27/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.75 3/4, down 7 1/4 cents; Nov 11 Soybeans closed at USD13.80 1/2, down 8 1/4 cents; Aug 11 Soybean Meal closed at USD355.80, down USD4.70; Aug 11 Soybean Oil closed at 56.40, down 19 pips. Beans were the weakest leg of the trio, with corn and wheat posting modest gains. Reports of China buying Argie soybeans which are now attractively priced relative to those from the US may have weighed on the market today. US debt concerns are keeping players nervous ahead of next Tuesday's deadline. Weather is seen less threatening this week. Funds were estimated to have sold 6,000 soybean lots on the day. Estimates for tomorrow's weekly export sales range from 550 to 850 thousand MT.

Corn: Sep 11 Corn closed at USD6.91 1/2, up 1 3/4 cents; Dec 11 Corn closed at USD6.91 1/2, up 4 3/4 cents. The market is factoring in lower production estimates than the USDA came up with earlier in the month, with yields now estimated to be around the 155-156 bu/acre area, as opposed to the 158.7 figure from our friends in Washington. Some damage has already been done in the market's view. We've got another two weeks to go yet until the USDA's next assessment of yields, but based on declines in good/excellent ratings recently then some sort of reduction seems likely. Funds were said to be net buyers of 7,000 contracts on the day. Estimates for tomorrows weekly export sales report are from 550 to 950 thousand MT.

Wheat: Sep 11 CBOT Wheat closed at USD7.04 3/4, up 10 3/4 cents; Sep 11 KCBT Wheat closed at USD7.88 1/4, up 7 3/4 cents; Sep 11 MGEX Wheat closed at USD8.51, up 12 cents. A spring wheat crop tour doing the rounds is reporting almost universally lower yields due to late planting and saturated field conditions earlier in the year. A recent sale of Black Sea wheat into Thailand, a fairly unusual destination, usurped offers from both the US and Australia highlighting the competitiveness of grain from that region. Estimates for tomorrows weekly export sales report range from 300 to 500 thousand MT.

EU Grains Close

27/07/11 -- EU grains finished with Nov London wheat GBP1.00/tonne higher at GBP163.50/tonne and Nov Paris wheat EUR1.75/tonne firmer at EUR196.00/tonne.

Selling was light as uncertainty still surrounds the eventual size and quality of the EU crop.

We do however have a better idea on barley yields which appear to be generally better than expected, if still somewhat lower than last year.

The French winter barley crop is already in the barn, with final yields estimated at 6.0 MT/ha. a fall of 6% on last season, but higher than the 5.5 MT/ha predicted by the USDA and Coceral. Quality is also said to be satisfactory with protein contents reported between 9.5% and 11.5%.

At home I am hearing reports of six row barley at Catterick doing 4.18 MT/acre dry, on decentish land - that's around 10 MT/ha!

There are also widespread reports of OSR producing some incredible yields approaching 5 MT/ha. So far this week I've had two "phenomenals" and one "whopping" use to describe yields here and it's only Wednesday!

Ukraine are reporting much better than expected grain yields too, with barley averaging 2.47 MT/ha and wheat 3.27 MT/ha, that's around 21% higher than the current USDA forecasts for both.

The jury is still out on European wheat though, although most analysts are now lining up in the region of 135-136 MMT, very similar to last year and again considerably better than the USDA's latest offering of 131.5 MMT.

Early Call On Chicago

27/07/11 -- The overnight grains were mixed with corn finishing around 5c weaker and beans & wheat narrowly either side of unchanged. Crude oil is a dollar lower and the USD a bit firmer, both are negative for the grains.

US debt concerns remain. One theory is that a default, however unlikely, would see a flood of money into grains as the dollar declines. Another is that spooked investors would pull money out of the grain sector looking for safer assets like gold.

It's all pretty hypothetical stuff as nobody really thinks that America will default. An eleventh hour late deal still seems by far the most likely option.

And then we just "carry on regardless" as the Beautiful South would say.

Corn and wheat both hover just under USD7/bushel and neither seem to have the strength to break through that level right at the moment.

US weather seems a little less threatening than it was last week for the time being.

As far as wheat is concerned traders will be conscious that Black Sea wheat is far cheaper with Egypt again buying Russian wheat this week for the third time in quick succession.

A spring wheat crop tour going on in the US at the moment is reporting lower yield potential.

Early calls for this afternoon's CBOT session: corn 4-6c lower, beans and wheat down 1-2c.

Chicago Close

26/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.83, up 17 1/2 cents; Nov 11 Soybeans closed at USD13.88 3/4, up 16 3/4 cents; Aug 11 Soybean Meal closed at USD360.50, up USD4.70; Aug 11 Soybean Oil closed at 56.59, up 49 points. The USDA reduced good/excellent crop ratings by two points last night prompting funds to buy an estimated 6,000 bean contracts on the day today. There appears to be some suggestion that the potential for a US debt default would see the dollar decline and therefore the price of agri-commodities like soybeans rise. They won't default however so where's the logic in that?

Corn: Sep 11 Corn closed at USD6.89 3/4, up 11 cents; Dec 11 Corn closed at USD6.86 3/4, up 12 1/4 cents. Funds were said to have bought 11,000 contracts on the day, the opposite of wheat they were supposed to have sold yesterday, on the back of a 4 point decline in good/excellent ratings last night. Moisture-laden winds coming from the Mexico tropics will increase rainfall chances in the Upper Midwest. The 3-day rainfall outlook is wet in Minnesota, South Dakota, Iowa and Wisconsin. At least .75 inch of rainfall is predicted in the Upper Midwest, but locally 2 inches in strong 'ridge-rider' thunderstorms, say Martell Crop Projections.

Wheat: Sep 11 CBOT Wheat closed at USD6.94, up 5 1/2 cents; Sep 11 KCBT Wheat closed at USD7.80 1/2, up 10 cents; Sep 11 MGEX Wheat closed at USD8.39, up 8 1/4 cents. Egypt bought Russian wheat, and Russian wheat alone, for the third tender in a row. In addition Thailand was also said to have bought Russian wheat at prices well under US levels. A weaker US dollar helped provide some support. US winter wheat harvesting is 75% done compared with 80% normally the USDA reported last night and spring wheat crop conditions improved one point.

EU Grains Close

26/07/11 -- EU grains finished with Nov London wheat GBP2.30/tonne higher at GBP162.50/tonne and Nov Paris wheat EUR3.00/tonne firmer at EUR194.25/tonne.

It was another "Turnaround Tuesday" with US and EU wheat futures closing higher after a lower start to the week.

Once again it would seem that the futures markets here and in the US are ignoring the big picture as Russian wheat made it's third clean sweep in a row at the latest Egyptian wheat tender.

Buying 120,000 MT of wheat today from Russia, Egypt has now bought almost half a million tonnes from the former Soviet state in the past three weeks.

The extension of a nil import tariff on wheat coming into the EU from outside the union looks set to see imports continue to outweigh exports over the next few months.

The US dollar remains under pressure on the back of the thorny subject of the raising of the US debt ceiling.

Obama Speaks

26/07/11 -- As the wrangle in America over the raising of the debt ceiling rumbles on the BBC quotes Barack Obama as saying: "Most Americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don't get."

Sounds like he'd be pretty hypocritical not to sign away the ethanol blender's tax credit then doesn't it?

The Morning Vibe

26/07/11 -- Lots of very kind Irish blokes wanted to buy me a beer last night, so what could I do? They liked my Paddy and Mick in the jungle joke. The one where they chance across an enormous gorilla and quick-thinking Paddy swiftly kicks it in the nuts to temporarily disable it and shouts "Run Mick, run!" to which Mick replies "Why? I haven't done anything."

After a lower close last night the USDA have predictably reduced the crop ratings for both beans (down 2 points good/excellent) and corn (down 4 points). Hence we are in the usual turnaround Tuesday mode this morning.

The only way to get bullish on wheat is to buy heavily into the US weather story and the potential for it to lead to serious corn losses.

Russia's internet connection must be down because they don't seem to know about any kind of weather issues, all they know is that they've got significantly higher under the counter carryover stocks than the USDA or anybody else in the west realised.

They've also got harvest pressure and the chance to bag themselves some much needed cash to buy seed and fertiliser for the 2012 crop.

Hence they're exporting at a rapid pace, and having just made sure that they got the last two Egyptian orders they will be expecting a hat-trick when the world's largest wheat buyer tenders again today.

The clock is ticking on the US debt ceiling issue, which will no doubt go to the wire, keeping the market nervous for a few more days yet.

Greece are starting to look a bit like "Little Derek" the alcoholic tramp who lives in the park. It's a close call as to which of those to are the least likely to pay you back that money that they owe you.

But we don't need to panic about that just yet do we? As long as we have some cash in our pockets to get the beer in tonight where's the worry?

Chicago Close

25/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.65 1/2, down 14 3/4 cents; Nov 11 Soybeans closed at USD13.72, down 16 1/4 cents; Aug 11 Soybean Meal closed at USD355.80, down USD7.20; Aug 11 Soybean Oil closed at 56.10, down 41 points. The market is nervous ahead of a resolution to the US debt ceiling issue, prompting funds to be net sellers of an estimated 6,000 contracts on the day. Weekend weather was better than forecast, which added to the bearish tone. After the close the USDA reported a fall of two percentage points in soybeans rated good/excellent to 62%, in line with trade expectations.

Corn: Sep 11 Corn closed at USD6.78 3/4, down 11 1/4 cents; Dec 11 Corn closed at USD6.74 1/2, down 11 cents. Funds sold an estimated 10,000 contracts on the day, unimpressed by the lack of progress in talks over the weekend to resolve the US debt issue. A downgrade in Greece's credit rating from Moody's also maybe reminded the market that the European debt crisis hasn't really gone away either. Weekend weather in the Midwest was better than anticipated, adding to the bull's frustration. After the close the USDA reported crop conditions down four points in the good/excellent category to 62%.

Wheat: Sep 11 CBOT Wheat closed at USD6.88 1/2, down 3 3/4 cents; Sep 11 KCBT Wheat closed at USD7.70 1/2, down 9 1/2 cents; Sep 11 MGEX Wheat closed at USD8.30 3/4, down 7 3/4 cents. Wheat fell in line with declines in corn and soybeans on the back of decent weekend rains and a cooler outlook replacing the dreaded "heat dome" for the next few days. Argentina's wheat belt also got a welcome shot of moisture over the weekend. US winter wheat harvesting is 75% done compared with 80% normally and spring wheat crop conditions improved slightly.

EU Grains Close

25/07/11 -- EU grains finished mostly lower with Nov London wheat down GBP0.80/tonne to GBP160.20/tonne and with May falling GBP0.85/tonne to GBP166.66/tonne. Nov Paris wheat was down EU1.75/tonne to EUR191.25/tonne whilst May12 declined EUR1.75/tonne to EUR196.50/tonne.

EU wheat continues to grind lower on lack of demand and generally better than expected yields. It still has a long way to go however to reach the levels coming out of the Black Sea,

Stunningly impressive yields are also being reported amongst the early rapeseed harvest, which saw the Nov Paris contract fall EUR10.50/tonne today to EUR424.25/tonne.

Weekend weather in the US provided a more widespread rain event for the Midwest than had been anticipated, with rainfall totals also generally higher than expected.

Producer selling remains light as prices decline and they busy themselves with the harvest, but some may have to bite the bullet sooner or later as Russia leads the market lower.

They've harvested 17 MMT of grains so far, with yields averaging 3.6 MT/ha, much better than a year ago.

The USDA report the American winter wheat harvest is 75% complete, spring wheat crop conditions improved slightly this week to 74% good/excellent.

Early Call On Chicago

25/07/11 -- The overnight grains finished lower with beans down around 10c, wheat down 7-8c and corn 7-9c easier. Crude oil is a dollar lower.

The market is concerned that the US debt ceiling issue hasn't yet been resolved. Whilst nobody seriously expects a default, massive spending cuts ARE a possibility, and one that wouldn't be good for the US economy with unemployment already nudging 10%.

The most likely scenario however IS a grudging rise in the ceiling. As with the latest "resolution" to the Greek debt crisis that will just be delaying the inevitable pain that WILL come home to roost one day.

A lot like Tony Blair, Barak Obama may be thinking, ha ha, at least it won't be me in charge when this shit hits the fan.

Weather reports suggest that the weekend saw a bit more rain than some had feared. Iowa, Illinois, Indiana and Ohio all got better than expected weekend moisture totals. The outlook for this week isn't quite as warm as was forecast last week either

Still, some kind of downgrade in weekly crop conditions can be expected from the USDA tonight.

That news won't come until after the close however, so we may finish lower tonight and have another turnaround Tuesday tomorrow.

Meanwhile Russia's grain production and export forecasts keep increasing, at least some of which will surely be to the detriment of US export prospects.

Early calls for this afternoon's CBOT session: beans and corn down 8-10c, wheat down 5-7c.

How Big Will Russia's Grain Exports Be In 2011/12?

25/07/11 -- About the only thing that everybody agrees on in answer to that question is "much larger than the USDA seem to think" at the moment.

They've hit the ground running exporting 1.3 MMT of grains in the first three weeks of July, an increase of 160% on the same period in 2010.

SovEcon are forecasting 2011/12 Russian grain exports at 18 MMT, of which the vast majority, 16 MMT, will be wheat. That's four times the volume exported last season and 4 MMT higher than the USDA currently have factored into their calculations.

Assuming that SovEcon are correct, and I have to say that I'd have far more faith in them than the hapless USDA, then that potentially knocks 4 MMT off the USDA's export projections from other global sellers, notably the EU and US.

The Russian Grain Union are even more bullish, raising their grain production estimate to 89-92 MMT and pegging exports at 18-20 MMT. They forecast exports of 1.8-1.9 MMT this month, rising to 2.5-3.0 MMT each in August and September.

Morning Markets

25/07/11 -- Morning has broken, except it doesn't look too much like this from my Irish hotel window, there's a strong hint that it's about to start lashing it down. No changes there then. Lots of the barley looks ready to go on the journey down from Dublin airport yesterday, they're just waiting for a dry window to get cracking it seems.

The overnight Globex markets are all lower, with wheat down around 8c, corn around 10c lower and beans 12-15c weaker. Weekend rains were apparently better and a little more widespread than had been expected.

China may import 4 MMT of corn in the 2011/12 crop year, and has possibly already bought 3 MMT of that, according to Rabobank. Given that 4 MMT is less than a half percent of global production and only a quarter of what neighbouring Japan imports it shouldn't really be a game changer.

What could be is the potential removal of the ethanol blender's tax credit still sitting on President Obama's desk. The USD6 billion saving that this could bring makes it an interesting carrot to dangle with US politicians still at loggerheads over the raising of the US debt ceiling.

Lack of progress in weekend talks to resolve that issue means that policymakers there missed their own self-imposed deadline to have the problem sorted before Asian markets opened this morning. That seems to be encouraging some money to be taken off the table.

Moody's have said that the planned Greek debt swap would constitute a default and have cut the nation's credit rating again to Ca, two away from the D word.

Clearly neither Europe's or America's debt problems have gone away over the weekend.

Meanwhile Russia is letting the rest of the world fret over heat in the US and rains stalling the harvest in the EU and cracking on. It's exported 1.3 MMT of grains in the first three weeks of July, an increase of 160% on the same period in 2010.

Kazakhstan can't wait to get in on the action itself, forecasting a grain harvest of 15 MMT, 23% up on last year. Harvesting has now begun in the south where early yields are reported to be well above average.

Rains continue to hamper progress in Ukraine, although the wheat harvest is well past halfway. "We're going to have more feed wheat to sell than you can shake a shitty stick at," said one local analyst.