Tuesday started in fine “turnaround” style in the CBOT markets with early gains across the markets only to be turned around into negative territory by the close of play. This, in turn, pressured markets this side of the pond leaving both London and Paris wheat markets lingering in a long term rangebound limbo.

US markets continued their selloff with a degree of blame being loaded onto the shoulders of new “Dodd-Frank” trading reforms which are aimed at tightening the rules affecting investors with swap positions by requiring them to hold collateral against both sides of the swaps which have previously been deemed to be effectively hedged against each other. Deadlines have forced “weak” speculators to liquidate at a time when net long positions in corn and soybean futures and options are at relatively high levels; thus exacerbating the effect of liquidations driving markets lower.

Interestingly, Nov ’12 soybeans rallied off a technical level created by a long standing “chart gap” today implying that all is not yet lost to the bears. Time will tell.

Early reports of US winter wheat conditions are showing some concern over emergence; seemingly the summer drought has not yet rolled over and died! More moisture is still needed if crop condition is to improve and go into winter dormancy in good condition.

Australian wheat growing regions are forecast to receive little, if any, rainfall in the next fortnight; if this becomes the case yield losses will be on the cards making USDA forecasts of 23 million mt output look high. Sub 20 million mt levels are being discussed quite widely.

Finally, the NFU and HGCA have almost agreed upon the UK wheat output at around 13.25 million mt. Projected import levels of maybe 2 million mt and exports of a top figure of  1 million mt leave the UK way behind recent self-sufficiency levels.