• CBOT markets closed lower in advance of the USDA report with soybeans (Nov ’14) at their lowest level since November 2010. Any sign of strength was jumped upon by the bears and swallowed up in a market which clearly wants to go lower as midwest weather continues to favour crop development. The main question in relation to the corn numbers in the USDA report is whether or not they will increase yield in the light of near record crop ratings and the good weather forecast in the coming two weeks. The trade estimates are for bearish numbers, but (as always) we will have to wait and see. Wheat continued its grind lower on the Egyptian tender as well as EU wheat prices testing ten month lows. It is reported that Romanian wheat quality is better than previously thought, and this no doubt triggered their aggressive offers to Egypt. Russian wheat prices for August delivery have reached season lows. The USDA numbers are expected to be neutral, unless they increase EU and Russian output, which will have to happen at some time – but maybe not July.

• US weekly export data was released as follows:

Wheat; 338,100 mt which is below estimates of 400,000-635,000 mt.
Corn; 744,600 mt which is within estimates of 600,000-1,050,000 mt.
Soybeans; 582,700 mt which is within estimates of 200,000-600,000 mt.
Soybean meal; 142,400 mt which is within estimates of 30,000-275,000 mt.
Soybean oil; 12,800 mt which is within estimates of 0-30,000 mt.

• Brussels granted 377,000 mt of wheat export licences for the week, which brings the season total to 411,000 mt compared with 318,000 mt last year. Corn imports for the week were 125,000 mt with a season total of 257,000 mt compared with just 49,000 mt a year ago.

• The second portion (50%) of the annual 278,000 mt zero tariff corn import quota was used yesterday, as well as 31,000 mt of a separate 400,000 Ukraine quota. This points towards the trade expecting import levies in the near future with the front three months of Chicago corn now trading well below $4.00/bu. Our estimate of new crop levy is in the order of €3.00/mt (based upon an aggressive freight costing) which basis Black Sea replacement would put Ukraine corn at around € 153.00/mt C&F – some €12 below Nov ’14 MATIF wheat and some €30 below feed wheat prices in northern Europe. Bearing in mind northern Europe is easily the best destination for Ukraine corn it looks fairly and squarely as though EU demand will remain strong. Whether it will reach last year’s14.51 million mt, which was just below to 2007/8 record of 14.6 million mt, remains to be seen. We suspect that ample supplies of feed wheat will force prices to a level where they have to compete in feed rations – otherwise we will be facing huge end stocks.