Morning Comments 27th July 2011

Well the dollar is back up to 1.095 this morning, it appears just a matter of time before it trades above the May 3rd record of 1.1011 as US officials seem incapable of reaching a decision on US borrowing. To lift the cap above the 14.3 trillion USD ceiling is the question, then what do they do in a few months, lift it again, then again, this train wreck is going to stop somewhere just don't be near the tracks when it does.

The question to ask ourselves is how do we benefit from a US failure. Overnight US and European grain futures closed higher.

Chicago wheat was in the red mid session but found support from the row crops and poor yield estimates from the spring wheat tour participants, you can follow the tour on http://twitter.com/#!/hedgeit.

The crop condition reports fuelled corn futures higher as expected but heat is also playing a role this week. European grains were all firmer with Paris rapeseed and ICE canola both putting on a few dollars in the Nov 11 contract.

Malt barley futures continue to carry around a $100 premium over Paris milling wheat futures which could lead you to think there maybe some upside potential in new crop bids here.

The upside in futures flies against the global cash market, it is almost like the fund managers are not even acknowledging the fundamentals that exist outside of the US......(have they ever)....

Russia has picked up another 120kt wheat sale into Egypt making it a clean sweep of the last month of tenders. Obama basically signed the ethanol blenders credit death warrant in his last speech by insinuating this is one of the places US savings can be made.

There is a big fan spinning with the USA wrote on it, lets see what hits it on August 2nd.

Although futures were higher look for a bearish day with many traders rejecting the higher US futures.