drought concerns in key producing regions

This through from Man Financial Futures desk this morning. The drought here in Oz is yet to rally markets significantly but realistically with no rain in the 14 day forecasts for all of Australia's key producing regions, the stage for a disaster in grain production in set. I firmly believe Australia may well be the trigger to set world grain markets into hyperinflationary rallies. Australia is the number 2 exporter of wheat in the world!

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CBOT Grains opened higher again, on weather concerns:
Dec Wheat @ 423.0 up 2.0 cents
Dec Corn @ 272 1/2 up 4.0 cents
Nov Beans @ 623 1/2 up 3 1/4
Aussie dlr, debt futures unmoved on steady RBA:

SYDNEY, July 5 (Reuters) - The Australian dollar and debt futures werelittle changed after the Reserve Bank of Australia left interest ratesunchanged, as widely expected, following Tuesday's monthly board meeting.Analysts had given only a slim chance of a tightening in policy this month,but see a greater risk of a move in August and after the release of thesecond-quarter consumer price index on July 26. The Aussie was $0.7434/39, compared with $0.7431/36 just prior tothe RBA's rate decision, while September 90-day bank bill futures rose 1 basis point to 93.95, implying a yield 30 basis points above the 5.75percent cash rate. END F.C. STONE - TUESDAY MORNING COMMENT:CROP RATINGS WERE DOWN A HISTORICALLY LARGE THREE POINTS EACH FOR CORN ANDBEANS AND DOWN A SHARP 5 POINTS ON SPRING WHEAT. JULY 1 SPRING WHEAT RATINGTHE FOURTH WORST IN 20 YEARS. ROW CROPS STILL RATED BETTER THAN LAST YEAR BUT6-10 AND 8-14 DAY MAPS TONITE ARE AS DEFINITIVELY HOT AND DRY AS ANY SET OFMAPS SO FAR THIS YEAR. THIS TO BE THE PERSISTENT PATTERN THRU JULY 18 WHICHWILL COVER MUCH OF U.S. CORN POLLINATION. REPORTEDLY RECORD BEAN AND SOYOIL VOLUME MONDAY. A MODERATE WESTERN U.S. DROUGHT MIGHT CUT THE U.S. YIELD TO NEAR 150 (148 LY)WHICH WOULD CUT STOCKS THIS YEAR TO 1.1 BLN, SUPPORT DEC CORN IN A 2.60 -2.85 RANGE INTO FALL AND "REQUIRE" AN UNPRECEDENTED SHIFT OF SOY ACREAGE INTOCORN INTO 2007 TO KEEP THE ETHANOL AND EXPORT S/D IN ANY KIND OF BALANCE ATALL. WITH SMALLER CARRYIN STOCKS THE 2007-8 U.S. CORN BALANCE TABLE IS NEAR"OUT OF CONTROL" WITHOUT ABOVE TREND YIELD AND MILLIONS MORE ACRES. DROUGHTTHIS YEAR WILL BRING THE "FOOD FOR FUEL" CRISIS TO A "HEAD" QUICKER THANANYONE HAS FEARED. CALL NITE GRAINS SHARPLY HIGHER. BE VERY CAREFUL ABOUT ANY SHORT POSITIONS ASWEATHER PATTERN LOOKS THREATENING WITH PRODUCTION RISK (DISPITE NEW GENETICS AND TECHNOLOGY) OPEN-ENDED FOR NOW.