31/01/12 -- EU grains finish posting strong gains with Mar 12 London wheat up GBP3.50/tonne to GBP168.50/tonne and Mar 12 Paris wheat rising EUR6.50/tonne to EUR215.50/tonne.

For the month of January as a whole that puts London wheat up GBP16.25/tonne and Paris wheat EUR13.00/tonne higher in a rise that very few saw coming. For London wheat this was the highest close for a front month since September, and for Paris the best since June.

Extreme cold in Russia, Ukraine and Eastern Europe is the latest weather scare, following on from dryness in Argentina which got the market spooked earlier in the month.

Have the market fundamentals really changed that much from a month ago? Local analyst in Argentina Agroconsult are now estimating the corn crop there at 18.8 MMT due to the drought, around 10 MMT lower than the USDA were forecasting last month. In round figures that means that we've seen London wheat prices rise 10.7% this month on the back of a 1% reduction in the size of the world corn crop. I'll let you decide if that's justified or not.

Meanwhile, a spin-off of autumn dryness and probable winterkill in Ukraine is likely to be increased corn production there in 2012. Spring corn plantings are likely to rise 25% to 4.5 million hectares, according to the Ukrainian Agribusiness Club. That will probably mean a second record corn crop in a row for the Black Sea nation later this year.

One theory doing the rounds is that heavy buying in the futures market today both sides of the Atlantic was due to shorts getting squeezed into stop-loss buying with margin calls starting to bite.

Certainly the differential between the cash and the futures market has widened, which would appear to confirm that this rally isn't end-user demand-led. UK interest domestically, and on the export front too, was said to be non-existent today as in fact it was for most of last week.

A sideline point of interest is that Nov13 London wheat closed at a slim GBP1.15/tonne discount to Nov12 today, whereas a year ago that differential was over GBP25.00/tonne.

30/01/12 -- EU grains finished mixed with front month Mar 12 London wheat up GBP0.45/tonne to GBP165.00/tonne but other old crop months GBP0.50/tonne lower. Mar 12 Paris wheat was unchanged at EUR209.00/tonne.

The markets drifted sideways. Negative influences were another bout of Eurozone jitters with the newswires awash with stories of Portugal getting dragged further into the mire.

Their borrowing costs rose to new euro-era highs today, as they are starting to look more and more like Greece #2. The latter hasn't yet managed to pull off a deal with private bond holders despite insisting that one is "very close" - weekend reports that their Eurozone exit strategy plan is at an advanced stage are also unsettling.

Underpinning the market however is concern developing over the ability of wheat in eastern Europe, Russia and Ukraine to withstand very cold temperatures this week, with Moscow's daytime high on Wednesday forecast to be a frigid -19C.

"A prolonged period of unseasonably warm weather has come to an abrupt end in Russia. Bitter cold is affecting the entire winter wheat zone not only the Volga and Central district, but also southern Russia wheat near the Black Sea," say Martell Crop Projections.

"The cold wave is expected to continue for another week with temperatures 15-20 F below normal," they add.

In contrast, things are looking up in Argentine with widespread rains in the forecast this week, although most seem to think that for corn the damage is done there is still time to see soybean prospects improve.

27/01/12 -- EU grains ended narrowly mixed Friday, with Mar 12 London wheat up GBP0.05/tonne to GBP164.55/tonne and Mar 12 Paris wheat down EUR0.25/tonne to EUR209.00/tonne.

Despite a subdued day today, overall London wheat has gained an impressive GBP7.55/tonne and Paris wheat EUR10.50/tonne during the course of the week.

Defra have made a few minor tweaks to the supply and demand numbers this week, reducing wheat imports and 2011 production slightly and increasing domestic consumption a fraction.

They've also introduced a new format to the way the balance sheet numbers are presented, introducing an "estimated operating stock requirement" which this season is pegged at 1.4 MMT. They now subtract that figure from the total available stocks less consumption before coming up with an exportable surplus. All clear?

That exportable surplus is said to be 2.54 MMT, around 180,000 MT less than in 2010/11. However they also tell us that we've already exported half of that amount by the end of November, which at a glance makes things look pretty tight with seven months of the season remaining.

Bear in mind though that this is now with 1.4 MMT skimmed off and "kept back for a rainy day" so to speak.

It is also notable that they have human and industrial consumption at only 300,000 MT less this season than it was in 2010/11. Without naming names they say that they are working on the assumption that "the one existing bioethanol plant" will be back in production Apr/Jun.

They also say that "usage by the bioethanol plant currently under construction is not included; its status will be reviewed in March."

26/01/12 -- EU grains finished mostly higher again with Mar 12 London wheat GBP1.25/tonne higher at GBP164.50/tonne and Mar 12 Paris wheat rising EUR1.25/tonne to EUR209.25/tonne. New crop London wheat was unchanged.

There wasn't a lot of fresh news, but the bulls have the bit firmly between their teeth at the moment. Bears are running for cover with the market now almost GBP25.00/tonne higher than it was six weeks ago. Nobody saw this sudden sharp correction coming.

The HGCA made some minor tweaks to the final 2011 production estimates, reducing UK wheat production very slightly to 15.26 MMT, still 3% higher than in 2010 despite the spring and early summer drought.

Human and industrial usage was also revised only fractionally lower to 6.9 MMT, despite Ensus showing few signs of springing back into life.

Brussels issued soft wheat export licences for 218 TMT this past week, the best total of 2012 so far but a long way from where you would expect things to be at this time of year.

The marketing year-to-date total now stands at 7.9 MMT, versus 12.3 MMT at the same time in 2010/11. So despite a slightly larger crop in 2011/12 EU-27 soft wheat exports are actually 36% lower than they were a year ago.

25/01/12 -- EU grains finish mixed with Jan 12 London wheat down GBP0.25/tonne to GBP163.25/tonne and Mar 12 Paris wheat rising EUR2.25/tonne to EUR208.00/tonne.

It was a strange sort of a day with May 12 London wheat posting a GBP5.50/tonne trading range, closing at GBP164.25/tonne despite hitting GBP168.50/tonne early doors. How anybody allowed themselves to get stiffed at the latter price is unclear.

London wheat is now up over GBP23.00/tonne from the lows of just six weeks ago, a serious rise that you would think must have been generated by an equally serious change in circumstances.

All that we have to go on though is a decline in Argentine corn production, that is more than made up for by a rise in output elsewhere around the globe, according to the USDA and IGC. The world wheat crop has also got bigger since then, according to the same two sources.

The only other bull story is perhaps yesterday's suggestion that Russia "might" introduce some form of restriction on grain exports before too long. This particular "news" is far from new, it's been know since at least October that they wanted to cap grain exports at around 24-25 MMT.

I estimate that they will have exported 19.5-20.0 MMT by the end of this month. Their exports have probably slowed to around 1.5 MMT in January and are likely to remain at that level going forwards, so they will probably get through to the end of April before they hit their self-imposed target.

Is Russia potentially being out of the market for a couple of months May/Jun really a big serious issue? I don't think so. A blessing Kazakhstan might think.

At home, feed manufacturers in the UK are unseasonably quiet, and well bought too. Almost to a man they are only looking to make sales, not to buy any more raw materials. There were apparently plenty of export offers of UK and Baltic wheat for all positions today but not a single bid in the market.

Meanwhile, we have world wheat plantings for the 2012 harvest projected at 225 million hectares - the largest since 1998. The US all wheat area is forecast at 57.9 million acres, an increase of 3.5 million from last year. Canadian sowings are seen up 12% and world ending stocks for 2011/12 and 2012/13 are seen as the highest in history by many.

Oh, and American farmers are expected to sow the largest corn crop since the war this spring.

And we haven't even mentioned the European debt crisis yet.

24/01/12 -- EU grains finished with new front month Mar 12 London wheat up GBP4.00/tonne to GBP163.50/tonne, and Mar 12 Paris wheat up EUR4.25/tonne to EUR205725/tonne.

This was the highest close for a front month on London wheat in almost four months.

Yesterday's rains in Argentina were a bit disappointing, but subsequent overnight rain and more in the forecast for tomorrow should improve the outlook for soybeans at least, if not corn.

Crop estimates for the latter vary quite widely now from 18 MMT to 23 MMT generally, with the USDA out on a solitary limb at 26 MMT.

The overnight US grains closed lower, and London and Paris wheat both traded either side during the session before pushing on in afternoon trade once America opened.

One rumour going around to send the Chicago market higher straight after the opening today was that the drought in Argentina means that the government there may introduce some sort of export ban this year. The government deny that this is the case.

Another was that Russia may be about to introduce either a grain export duty and/or ban. Yet another was that they are in the market to buy US wheat. The latter seems particularly unlikely with an abundance of cheaper wheat much closer to home in Kazakhstan.

Russia has said for some time that they wish to cap foreign sales at around 24-25 MMT this season, and they look likely to finish January with something like 19.5-20.0 MMT already shipped, so they are likely to hit their maximum around the end of March give or take a few weeks.

Kazakhstan will be looking to take advantage of any window of opportunity that comes its way, having only shipped 4.1 MMT of grains abroad in the Sep-Dec period. They've got to get their skates on to hit their 15 MMT target for the 2011/12 season. They have the wheat that's for sure after a post-Soviet era record harvest last year, it's logistics that's their problem, although a Russian export sabbatical would help free up some transport and portside capacity.

Nevertheless, it looks like the market is determined to attempt to forge it's way higher yet, unless (or is it until?) the European debt crisis pulls the rug from under this particular recovery.

23/01/12 -- EU grains finished higher with the exception of expiring Jan 12 London wheat which was unchanged at GBP157.00/tonne. New front month Mar 12 was GBP1.35/tonne higher at GBP159.50/tonne and Mar 12 Paris wheat rose EUR3.00/tonne to EUR201.50/tonne.

Weekend rains in Argentina were less widespread and lighter than anticipated. Few analysts expect corn production there to be anywhere near the USDA's 26 MMT estimate, with 20 MMT probably now the average and some lining up around the 18 MMT mark.

Outside markets were supportive after Iran said that it would "definitely" close the Strait of Hormuz if today's EU oil embargo disrupted its exports of crude oil.

Eurozone jitters remain however. Greece didn't manage to get it's weekend deal sorted with private bond holders to accept a 50% haircut.

Media reports say that Italy needs to redeem EUR48 billion next month, starting with EUR26 billion due on Feb 1st. In addition to that there's a further EUR40 billion due in March and another EUR40 billion maturing in April.

Ukraine crop conditions appear to have improved, but a quarter of their winter sown crops are still likely to need replanting in the spring. Central and western parts of the country are still under stress from low soil moisture reserves however.

Russia's domestic grain prices are rising with exports set to reach around 19.5-20.0 MMT by the end of this month, only 5 MMT away from what the government there say will be take them outside their comfort zone.

20/01/12 -- EU grains ended with Jan 12 London wheat down GBP0.25/tonne at GBP157.00/tonne and Mar 12 Paris wheat was unchanged at EUR198.50/tonne.

EU wheat continues to do a pretty good job of attempting to defy gravity, closing GBP1.50/tonne higher on the week. Paris wheat clawed it's way EUR1.00/tonne higher compared with last Friday.

Weather models have developed a wetter look for Argentina this weekend, with 1-3 inch totals expected to add to last week's similar amounts. The cooler temperatures that this front is expected to leave behind should also be of benefit.

Despite downgrading corn output forecasts for both Brazil and Argentina yesterday the IGC say that they still expect both countries to produce record corn crops this year.

Brussels issued 175,000 MT of soft wheat export licences this week, bringing the marketing year-to-date total 7.7 MMT so far, a 36% decrease on where we were this time last year despite a larger crop this time round.

US analytical firm Informa Economics today estimated that American farmers will plant 57.9 million acres of wheat for the 2012 harvest, an increase of 3.5 million, or 6.4%, on last year. That's 600,000 acres up on their December estimate.

For corn they came out with 94.75 million acres, up 2.8 million on last year and almost 360,000 acres higher than they suggested in December. That's around 1.2 million acres above the current post war record high of 93.5 million set in 2007 when US farmers gleefully jumped on the ethanol bandwagon.

If they're right, and US yields in 2012 were to return to a trendline 160 bu/acre, that would produce a monster crop of around 14 billion bushels this autumn allowing for an 8% abandonment rate. That's 355.6 MMT in English money, which would be a whopping 41.6 MMT more than in 2011, an increase of 13% and around twice the size of the entire production of Argentina this year.

20/01/12 -- EU grains ended with Jan 12 London wheat down GBP0.25/tonne at GBP157.00/tonne and Mar 12 Paris wheat was unchanged at EUR198.50/tonne.

EU wheat continues to do a pretty good job of attempting to defy gravity, closing GBP1.50/tonne higher on the week. Paris wheat clawed it's way EUR1.00/tonne higher compared with last Friday.

Weather models have developed a wetter look for Argentina this weekend, with 1-3 inch totals expected to add to last week's similar amounts. The cooler temperatures that this front is expected to leave behind should also be of benefit.

Despite downgrading corn output forecasts for both Brazil and Argentina yesterday the IGC say that they still expect both countries to produce record corn crops this year.

Brussels issued 175,000 MT of soft wheat export licences this week, bringing the marketing year-to-date total 7.7 MMT so far, a 36% decrease on where we were this time last year despite a larger crop this time round.

US analytical firm Informa Economics today estimated that American farmers will plant 57.9 million acres of wheat for the 2012 harvest, an increase of 3.5 million, or 6.4%, on last year. That's 600,000 acres up on their December estimate.

For corn they came out with 94.75 million acres, up 2.8 million on last year and almost 360,000 acres higher than they suggested in December. That's around 1.2 million acres above the current post war record high of 93.5 million set in 2007 when US farmers gleefully jumped on the ethanol bandwagon.

If they're right, and US yields in 2012 were to return to a trendline 160 bu/acre, that would produce a monster crop of 15.16 billion bushels this autumn. That's 385 MMT in English money, which would be a stunning 71 MMT more than in 2011, an increase of 22.6% and more than three times the entire production of Argentina. That kind of knocks the current problems there into a cocked hat.

19/01/12 -- EU grains finish mixed, although wheat was mostly higher, with Jan 12 London wheat up GBP0.75/tonne to GBP157.25/tonne and Mar 12 Paris wheat rising EUR1.00/tonne to EUR198.50/tonne.

London wheat still seems to be basking in the glory of last week's friendly export data for November. Today's bond auctions by France and Spain were well received by the market despite recent S&P's downgrades, allaying fears (even if only temporarily) over European debt.

What other fresh news was around today was largely bearish though. Some of it very bearish going forward into 2012/13.

The IGC raised their estimate on 2011 world wheat production by 7 MMT to 690 MMT, pegging 2011/12 ending stocks 4 MMT higher than last month at 204 MMT. World corn production and carryout were also increased by 8 MMT and 2 MMT respectively.

Despite reducing South American prospects because of drought and heat stress both Argentina and Brazil are still expected to produce record corn crops, they said.

Looking ahead world wheat plantings for the 2012 harvest are projected to expand by 1.7%, to 225 million hectares - the largest since 1998, they added.

Elsewhere, Strategie Grains issued their second forecast on 2012/13 grain production within the EU-27. They came up with a soft wheat crop estimate of 133.3 MMT up 3% from a year ago, and durum wheat production of 8.9 MMT up 6% from last year. That gives us an all wheat crop of 142.2 MMT versus the USDA's 2011 figure of 137.7 MMT.

Barley production is seen 5% higher in 2012 to 54.5 MMT.

Citing a sharp fall in demand from the animal feed sector they peg world 2012/13 ending stocks at a record 211 MMT next year, with those in the EU-27 climbing almost 20% to 15.8 MMT.

Ag Canada estimate the wheat area there this year at 24.2 million acres, up 12% on 2011. The Canadian barley area is seen leaping 21.5% to a record 7.9 million acres and rapeseed plantings are also forecast to be a record 19.8 million acres.

18/01/12 -- EU grains finished mostly lower with Jan 12 London wheat down GBP1.50/tonne to GBP156.50/tonne and Mar 12 Paris wheat falling EUR2.50/tonne to EUR197.50/tonne.

There was a weaker tone to US markets on the back of a wetter outlook for Argentina with significant rains showing up starting this weekend and lasting through into the middle of next week.

The EU markets tried to resist moving lower, with London wheat in particular trading in positive territory for much of the day.

Chicago corn, wheat and soybeans all quickly came under pressure this afternoon though, with front month March wheat opening at USD5.99/bushel. Not only was that below the psychologically important six dollar level, it was also half a cent lower than last weeks low set when the USDA report came out on Thursday.

A close at that level would be little more than 20 cents away from the 2011 mid-December low which was also the lowest closing price for a front month since July 2010 when Russia was burning up.

Canada's farm ministry estimate world wheat ending stocks to be at the highest level in history at the end of the current season in the summer. Meanwhile Western Australia state is wrapping up a record grain harvest of it's own right now. Bumper carryover stocks from last season should see Australia export a record volume of wheat in 2011/12.

UK wheat exports in November were a bumper 442,797 MT, aided by low water in the Rhine and Danube boosting demand from the continent and beyond. Even so though, on a cumulative basis we've still exported 24% less wheat in the Jul/Nov period in 2011/12 than we had at the same point last season.

The November data included the first shipment of UK wheat to the US in two years. There's a second such consignment currently loading in Tilbury by all accounts. It's a good job that the Americans, Dutch and Spanish want our wheat because domestic demand from the feed sector is extremely flat indeed.

Meanwhile the European debt crisis lurches on from not just one disaster to another, but from several disasters to another. Ratings agency Fitch says that Greece is insolvent and that it will default on its debt, albeit in an orderly fashion. They also said that a two-notch downgrade of Italy's credit rating could be on the cards before the end of the month.

The news follows S&P's cutting it's ratings on a host of European countries, and the EFSF bailout fund itself, last week. Today lesser know ratings agency Egan Jones cut Germany, weighed down by it's exposure to the EFSF and the ECB's links to weaker banks, to AA-minus from AA with a negative outlook.

17/01/12 -- EU grains ended with Jan 12 London wheat up GBP2.55/tonne to GBP158.00/tonne and Mar 12 Paris wheat up EUR1.75/tonne to EUR200.00/tonne. For London wheat this was the highest close for a front month since late September.

Spillover support from firmer US markets on the back of dryness in Argentina saw the market probe higher despite ongoing eurozone economic concerns.

News that the UK exported a hefty 442,797 MT of wheat in November, more than double the volume shipped in October, also lent support. That amount included almost 50,000 MT heading to the US, the first such shipment since the 2009/10 season. Low water in the Rhine pre-Christmas boosted demand for UK wheat on the continent it seems.

That means that the UK has now exported almost 1.3 MMT in the July/Nov portion of the 2011/12 marketing year.

Dryness in Argentina has prompted the Rosario Grains Exchange to cut it's corn production forecast there from 26.0 MMT last month to 21.4 MMT, 1.1 MMT down on last season despite an increase in planted area.

Ukraine has received "abundant" snowfalls since Sunday which will help protect winter wheat there from the worst of the winter. Even so 25-33% of crops may have to be replanted in the spring. That will probably lead to a sharp drop in wheat production in 2012, but possibly an increase in corn output.

Total grain exports from Ukraine so far this marketing year are up 42% on 2010/11 to 9.65 MMT. Russia, Ukraine and Kazakhstan combined have exported 30.7 MMT of grain in the first half of 2011/12 and have the potential to ship a further 28 MMT in remainder of the marketing year, say Agritel.

Crop conditions in Europe remain generally favourable with little winter kill threat, according to MARS (the Monitoring Agricultural ResourceS Unit).

On the international tender front Tunisia is shopping for 125,000 MT of wheat and the UAE is looking for 40,000 MT of wheat.

16/01/12 -- EU grains finished narrowly mixed with Jan 12 London wheat down a whopping five whole pence to GBP155.45/tonne, and Mar 12 Paris wheat up EUR1.25/tonne to EUR198.25/tonne. New crop London months were GBP0.85/tonne lower.

With America closed for Martin Luther King Day there was very little fresh news or impetus about.

It was a dry weekend in Argentina, with little respite in the forecast for the main growing areas this week. Corn and soybean plantings have stalled at around 85% done and the planting window is rapidly closing.

Dryness in Ukraine is also raising a few eyebrows, with production prospects for this season's harvest already touted as being well below last year's record output of 56.4 MMT. Winter wheat acres that have failed to sprout, or didn't get planted at all might end up going into spring barley or corn. If it's the latter then perversely they may end up with a larger grain harvest than they think if Mother Nature plays ball.

The wretched European debt crisis is never far from the headlines, with a March Greek default looking more likely after a breakdown in talks with the private sector currently unwilling to take a 50% write-down on the debt they hold.

Following an assortment of credit rating downgrades for various EU countries on Friday, including France and Austria, S&P's went one further tonight by cutting it's rating on the EFSF eurozone bailout fund to AA+.

13/01/12 -- EU grains shrugged off yesterday's declines recovering to finish mostly higher with Jan 12 London wheat up GBP3.50/tonne to GBP155.50/tonne and Mar 12 Paris wheat rising EUR3.00/tonne to EUR197.00/tonne.

For the week as a whole nearby London wheat was up GBP3.75/tonne whilst Paris wheat lost EUR4.00/tonne on the continuous chart, courtesy of January expiring mid-week. Mar 12 Paris wheat gained EUR1.75/tonne on the week, whilst Mar 12 London wheat rose GBP3.15/tonne.

Based on this close we have the curious situation where soon to go off the board January London wheat is now a premium to March and parity with May.

The euro had improved steadily throughout the week, buoyed by successful Spanish and Italian debt auctions. However the single currency gave up most of those gains today, with the pound rising from under 1.1950 to close to 1.2100 in late afternoon trading.

The single currency also slumped to fresh 16-month lows against the US dollar as rumours circulated that a credit downgrade was "imminent" for several eurozone countries.

In the end Standard and Poor's downgraded an assortment of countries late in the day, including a loss of it's prized AAA rating for France, criticising Europe's lack of decisive action to resolve the debt crisis.

The recent weakness of the euro is arguably one of the factors that has helped French origin grain make inroads at recent Egyptian wheat tenders. The latter bought three cargoes of wheat today, two from France and one from Russia.

The Buenos Aires Grain Exchange say that corn and soybean plantings there are only around 85% done, normally they'd be finished with corn by now and wrapping up with soybeans.

12/01/12 -- EU grains ended with Jan 12 London wheat down GBP4.50/tonne, or 2.9%, to GBP152.00/tonne and Mar 12 Paris wheat down EUR7.25/tonne, or 3.6%, to EUR194.00/tonne.

The much awaited USDA report, which was expected to be bullish by many in the market, sent the market crashing in afternoon trade with US corn going limit down - the sixth successive limit move it has posted on this day in January. Three of the last four have now been limit down moves.

Argentine corn production was cut as expected, but at 26 MMT it's still a record crop. Brazil's corn crop was left unchanged at 61 MMT, also an all-time high. Soybean production for both was trimmed, by 1.5 MMT in the case of Argentina and by 1 MMT for Brazil. Even so both numbers would still be the second highest output in history.

On the wheat front US plantings were forecast higher than most anticipated at 41.9 million acres. World production was raised 2.5 MMT to a record 691.5 MMT by virtue of a 1.5 MMT upgrade for Kazakhstan (of whom they've had their estimate far too low for some time now), 0.8 MMT more from Brazil and a small increase for Russia too.

World wheat ending stocks in 2011/12 were raised 1.5 MMT to 210 MMT, which is now less than half a million away from being the highest ever and 8 MMT more than the so called burdensome levels of 2008/09.

There were also some minor tinkerings with world wheat exports with Australia's potential reduced 1 MMT and Russia and America's increased by 0.5 MMT each - the latter looking particularly unlikely to be achieved.

Elsewhere FranceAgriMer increased slightly their estimate for the 2011 harvested soft wheat crop to just under 34 MMT, a 5% drop on 2010. Exports within the EU are seen holding steady with last season at 6.6 MMT, but exports to non-EU destinations are forecast to fall by around a third to 8.7 MMT.

Despite the recent bout of euro weakness Brussels was only required to issue 167,000 MT of soft wheat export licences in the week to Jan 10th. That brings the marketing year to date total to 7.53 MMT, a 37% decline on this time last year.

The euro reversed that trend and was sharply higher today after promising bond auctions from Spain and Italy, helping to explain the larger decline for Paris wheat than it's London counterpart this afternoon.

11/01/12 -- EU grains finished mixed although Jan 12 London wheat bucked the trend closing GBP1.60/tonne higher at GBP156.50/tonne, Mar 12 Paris wheat fell EUR0.50/tonne to EUR201.25/tonne. Other London months were between GBP0.60/tonne lower to GBP0.55/tonne higher.

For London wheat this was the highest close for a front month since late September.

Argentina got a bit more rain than was anticipated overnight and throughout today. There's a fair bit more in the forecast for tomorrow as well before the rains move away to the north. Also on a positive note, the temperatures that this front is leaving behind are much cooler than to 95-105 degrees that they have seen of late.

The trade is still debating rainfall amounts and how much benefit this event is likely to have done. Martell Crop Projections say that "2-4 inch totals (fell) in Santa Fe, Cordoba and northern Buenos Aires. These are key corn and soybean provinces."

The vibe at the moment seems to be that soybeans stand to benefit more than corn, particularly second crop soybeans (usually sown in December and often immediately after wheat) which can now benefit more fully from these rains.

The big highlight of the week apart from that is tomorrow's USDA world supply & demand and stocks report. They will also announce their ideas on US wheat plantings for the 2012 harvest. Trade opinion on this varies quite widely with some anticipating a drop of as much as a million acres from their previous estimate of 40.65 million, yet others such as Allendale are predicting an increase of up to 2.2 million.

Other news is limited. Algeria are tendering for 50,000 MT of wheat for March. South Korea is buying optional origin feed wheat to supplement it's corn requirements at heavily discounted levels to US corn.

10/01/12 -- EU grains finished mixed with Jan 12 London wheat up GBP0.35/tonne to GBP154.90/tonne and expiring Jan 12 Paris wheat rising EUR0.50/tonne to EUR203.25/tonne.

Fresh news was pretty thin on the ground, rains are set to arrive in Argentina today and last through to Friday with varying amounts of a quarter of an inch to up to 3 inches with 85-90% coverage.

The other big event of the week is Thursday's USDA report which will likely feature downgrades to South American corn and soybean production plus revised final estimates on 2011 US production and US all wheat acres. If that wasn't enough we'll also get new quarterly and 2011/12 ending stocks numbers too.

For the time being at least fund money seems to quite fancy getting back into the grains sector in 2012. The longevity of their renewed risk on strategy may well decide where we go next.

The EU still has the ability to upset the apple cart any time though. Ratings agency Fitch say that there is a significant chance that Italy will have its credit rating downgraded as soon as this month. Greece is trying to get private sector bondholders to accept a 50% haircut on debt in an attempt to get a second EU/IMF bailout.

South Korea's largest feedmiller has bought a couple of optional origin cargoes of feed wheat this week, at levels around USD60/tonne below the price of US corn (which it has also bought), indicating that it is watering down it's corn requirements with cheaper alternatives.

09/01/12 -- EU grains ended with Jan 12 London wheat up GBP2.80/tonne to GBP154.55/tonne and soon to expire Jan 12 Paris wheat up EUR1.75/tonne to EUR202.75/tonne.

Jan 12 Paris wheat goes off the board tomorrow, new front month March closed EUR6.00/tonne higher at EUR201.25/tonne. You could say that that suggests that the front-end premium that we've seen of late maybe hasn't really been justified, and why should it exist at all in fact?

Argentine weather dominates the start of another trading week. Some are saying that this is the worst drought in 70 years, and could cause more damage than the one of 2008/09 that slashed corn and soybean output by around 30%.

Yet others say that the drought can "in no way be compared to what happened in 2008," according to a report on Bloomberg today quoting Argentina’s National Institute for Farming Technology.

Whichever is true, it is the market's perception of reality that is important right now.

In other news German farmers have planted 5.52 million hectares of winter grains for the 2012 harvest compared to 5.34 million a year ago. The German Statistical Office say winter plantings of wheat are 3.23 million ha (+2.0%), barley sowings are 1.24 million ha (+5.6%) and those of winter OSR at 1.32 million ha (+1.3%).

Chicago grains came in firmer and swiftly moved sharply higher in afternoon trade, adding to enthusiasm for EU wheat.

The European debt crisis is still bubbling along under the surface. Data today shows that Italian & Spanish bank deposits declined sharply during Oct/Nov, raising fears a deposit outflow trend has already started in Italy and Spain.

Later in the week we have the USDA's revised numbers on US crop production in 2011, plus quarterly ending stocks, 2011/12 ending stocks and an assortment of world production numbers.

06/01/12 -- EU grains reversed some of yesterday's losses to close with Jan 12 London wheat up GBP1.00/tonne to GBP151.75/tonne, Jan 12 Paris wheat rising EUR4.25/tonne to EUR201.00/tonne.

At the end of a choppy first week of 2012 there wasn't actually a great deal of overall change - London wheat was GBP0.50/tonne lower and Paris wheat down EUR1.50/tonne.

The EU only issued 106,000 MT of soft wheat for the week to Jan 3rd. That's the lowest weekly total of the 2011/12 marketing year so far. Even allowing for the fact that it was a holiday week it's a pretty poor performance. Cumulative exports now stand at 7.36 MMT, almost 4 MMT down on a year ago.

On a brighter note French wheat accounted for half of the 240,000 MT of the grain that Egypt bought in a tender today. Ukraine wheat also got the nod for one cargo with optional Russia/Kazakhstan origin making up the remainder of the order.

The weak euro, which fell to a fresh 15-month lows against both the pound and the dollar today, seems to be helping EU wheat regain some market share. With the eurozone crisis lurching from one calamity to another the outlook certainly seems to be for further declines for the single currency.

The weather in South America is the other principal factor in the market at the moment with bears pinning their hopes on rain forecast for the second half of next week and into the following weekend. The wheat harvest in Argentina is almost over so weather concerns aren't a factor for that, but corn planting has yet to be completed - and that is what is getting the trade all excited.

The USDA will issue a revised crop production estimate for that next week. They currently stand at 29 MMT but the trade is now suggesting that 24-25 MMT may be nearer the mark, possibly less if next week's rains disappoint.

Also next week the USDA will report on US winter wheat plantings, the trade is expecting those to come in around 2 million acres higher than previously reported.

It's already shaping up to be another volatile week ahead. Spain and Italy will attempt to auction off debt, how well that goes and what yield they have to pay will be closely scrutinised. Weather watchers will be keeping a close eye on developments in South America and then we have the USDA out on Thursday. Chicago corn has posted a limit move for each of the last five years on the day of the January WASDE report.

05/01/12 -- EU grains finished lower with Jan 12 London wheat down GBP1.75/tonne to GBP150.75/tonne and Jan 12 Paris wheat falling a hefty EUR6.00/tonne to EUR196.75/tonne.

It was a second day of correction for wheat, appearing to highlight that volatility will be the theme for 2012 just as it was for much of 2011.

European debt worries were back to the fore, with the single currency falling to 15-month lows against both the US dollar and sterling.

UK and EU farmer selling reportedly picked up this week as ex farm levels rebounded to psychologically important levels, and the best that has been on offer for some time.

The weather forecast in Argentina is turning wetter. As that has been just about the only bullish factor supporting this three week long rally it is perhaps not surprising that a correction from markets that had gained more than 10% in the case of London wheat and in excess of 16% for Paris wheat was on the cards.

EU exports remain sluggish. Brussels only issued export licences for 136 TMT last week. OK that was Christmas week but you have to go all the way back to the first week of the marketing year to find a lower weekly total.

That brings total EU exports to 7.26 MMT in 2011/12 so far, 35% down on the 11.13 MMT that had been exported this time twelve months ago.

EU ending stocks are seen increasing 8.4% in 2011/12 by the USDA, although other estimates are significantly higher. Rabobank forecast a 13% rise and are predicting prices on the Paris market to average a lowly EUR168.75/tonne in 2012.

That price is so low that I had to get written confirmation that I hadn't misread it. At around 14% below where we are now that would suggest London wheat averaging just GBP130.00/tonne this year.

Next week sees Spain and Italy attempting to auction off debt, rains maybe finally arriving in Argentina and the USDA releasing it's January world supply and demand estimates. What could possibly go wrong?

04/01/12 -- EU grains ended with Jan 12 London wheat down GBP2.80/tonne to GBP152.50/tonne and Jan 12 Paris wheat fell EUR6.25/tonne to EUR202.75/tonne. New crop London wheat was down GBP4.00/tonne.

It was a strange sort of a day which started off quietly but suddenly turned sellerish mid-morning. It's difficult to say exactly why.

Whatever the reason, merchants are reporting increased farmer selling today after three weeks of upside during which Jan 12 London wheat had put on GBP14.30/tonne based on last night's close.

A German bond auction was fully subscribed to, but in a manner than many described as disappointing. The market now appears to be thinking to itself "hmmm, if they aren't falling over themselves to buy German bonds what are they going to make of France's EUR7-8 billion auction tomorrow?"

The euro sank to one year low against the pound, and very close to last week's yearly low versus the dollar on the news.

Some weather forecasters are turning wetter for Argentina, although not until next weekend. QT Weather are talking of "a swath of 1.25-4.00 inch (rain) totals over Cordoba, Sante Fe and Entre Rios" in Central Argentina for the 14/15th January.

Russian customs authorities report that the country has shipped out 17.9 MMT of grains to Dec 29th, including 14.8 MMT of wheat, 2.0 MMT of barley and 0.75 MMT of corn.

That still leaves more than 7 MMT left to go before they hit their suggested self-imposed limit of 25 MMT. Exports are expected to slow up a little now, partly due to seasonal problems and also as much of what is left to export is located further away from the ports.

Winter wheat crop conditions in the top US producing state of Kansas have improved to 53% good to excellent from 47% just over a month ago, with Oklahoma ratings also jumping to 63% from 56%, say the USDA.

03/01/12 -- EU grains extended their recent gains with Jan 12 London wheat climbing GBP3.05/tonne to GBP155.30/tonne, Jan 12 Paris wheat rising EUR2.50/tonne to EUR209.00/tonne.

The rest of the EU grains complex also posted strong gains with corn and rapeseed both up EUR6.75/tonne nearby.

For London wheat this was the straight sixth up day during which time it has risen GBP10.80/tonne, or 7.5 percent. Paris wheat has now been up for 11 of the past fourteen sessions and has now risen 17 percent since the last day of November.

It's not particularly demand for wheat, or even damage to developing wheat, that is behind this rally. It's the developing drought in South America damaging corn and soybean production there.

The trade is now talking a Brazilian soybean crop some 3 MMT or so below the current USDA estimate and a Argentine one of around 4 MMT less than the USDA predict. Corn production potential in the latter is thought to be as much as 6 MMT lower than the USDA's 29 MMT estimate.

Even so losses of this kind of magnitude are hardly critical. A 23 MMT Argentine corn crop would still be only 0.3 MMT away from being the highest in history.

What is more important right now is how does the trade perceive these losses, and if they will be the catalyst to encourage fund money back into the grains sector in the New Year we now find ourselves in.

02/01/12 -- Paris grains started 2012 where they left 2011, on the offensive, with Jan 12 Paris wheat rising EUR4.00/tonne to EUR206.50/tonne. Corn, rapeseed and malting barley futures also posted solid gains of around EUR3-4/tonne to kick off the New Year.

It was thin trade with much of the rest of the world taking a day off, but Jan 12 Paris wheat pushed on to post its highest close since September.

Parts of Brazil got rain over the festive period, although not enough for soil moisture deficits to fully recover. Meanwhile Argentina, where around 20% of the soybean and corn crops were still to be planted as of last week, remained dry.

As well as having a dry weekend, temperatures in Argentina were said to have been above to well above normal, particularly in western growing areas with highs across the country ranging from 32-39C.

A strong short wave trough offers the best chance for some moisture relief, but that doesn't show up until early next week.

Closer to home, weekend rain and snow across much of western and central Europe will have helped replenish soil moisture for winter wheat, although parts of Hungary and Romania and much of Ukraine are still dry.

02/01/12 -- Paris grains started 2012 where they left 2011, on the offensive, with Jan 12 Paris wheat rising EUR4.00/tonne to EUR206.50/tonne. Corn, rapeseed and malting barley futures also posted solid gains of around EUR3-4/tonne to kick off the New Year.

It was thin trade with much of the rest of the world taking a day off, but Jan 12 Paris wheat pushed on to post its highest close since September.

Parts of Brazil got rain over the festive period, although not enough for for soil moisture deficits to fully recover. Meanwhile Argentina, where around 20% of the soybean and corn crops were still to be planted as of last week, remained dry.

As well as having a dry weekend, temperatures in Argentina were said to have been above to well above normal, particularly in western growing areas with highs across the country ranging from 32-39C.

A strong short wave trough offers the best chance for some moisture relief, but that doesn't show up until early next week.

Closer to home, weekend rain and snow across much of western and central Europe will have helped replenish soil moisture for winter wheat, although parts of Hungary and Romania and much of Ukraine are still dry.