EU grains market report - 25th July 2012
The bad news for Europe is now coming thick and fast from all angles, with Spain looking like the recently agreed banking sector bailout was just the tip of a very large iceberg.
A full blown Spanish bailout would be the largest drain yet on what is starting to look like a woefully inadequate stability fund. And then there's Italy...
Meanwhile it's looking like Greece hasn't been able to comply with all the criteria to qualify for it's next trance of bailout funding so some further debt restructuring there is going to be necessary to avoid a default.
Yields on Spanish 10-year bonds rose to 7.6% and the Italian stock market crashed to a euro era low yesterday.
The grain market crashed as spec money scrambled for the exits as things went into a full on risk-off mode.
The US weather outlook is a little brighter. "A strong storm tracking through southern Canada will challenge a dome of high pressure currently causing heat-wave conditions in the US heartland. Rainfall is expected to be heavy in the Northern Midwest, but the jury is still out on how much rain would develop in the “heart” of the corn belt. Nebraska, Iowa , Missouri and Illinois may miss out on heavy, soaking rains, though scattered showers are still indicated with variable amounts from .25 to 1.25 inch," say Martell Crop Projections.
With the US winter wheat harvest winding down, attention is now starting to switch to spring wheat. Although crop conditions for that have also been declining lately prospects still look pretty favourable, and far better than for corn.
"North Dakota saw wheat conditions decline for the 4th straight week on Monday to a season low 68% good-excellent. Poor rated wheat remained steady near 5%. Nine percent of the harvest was already complete, the second earliest on record.
"Hot temperatures have taken a toll on wheat conditions, no doubt, shrinking the yield causing premature ripening. Light-weight kernels may be revealed at the grain elevator since extreme heat coincided with the grain filling stage. This may still be a good harvest from favourable spring growing conditions. The USDA pegged the hard red spring wheat harvest at 435 million bushels in the July report and nearly 10% higher than last year’s 398 million bushel crop," Martell Crop Projections add.
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