Once again the market is very much wheat focussed with Paris hitting new highs as technical chart based buying from funds was evident along with decent cash demand from non EU buyers and a drop in the Euro as Greece passed its austerity measures.

The EU has to begin the job of rationing; either domestic prices have to rise to close the export channel or the export price has to rise to switch demand away from EU origin. Neither of these scenarios are playing out right now! The upshot of this means that significant corn imports will be required to meet demand (which will be enlarged as a result of growing wheat exports) later this season, and EU buyers would seem to have “missed the boat” as both Ukraine and S American premiums have risen on limited EU buying. When the buying kicks in, (notice we didn’t say “if the buying kicks in”) the impact on prices is likely to be significant.

Friday’s USDA report looms large, and we (alongside many others) do not expect the figures to reflect our view on corn yield or carryout stock. Our views on the Argentine crop, Ukraine exports and potential EU imports which we have reported here in recent weeks point towards a changing global corn perspective which will drive prices higher and demand towards an already tight US.