eCBOT Close/Early Call

Overnight grains closed firmer, with soybeans leading the way posting gains of around 20-22 cents. Corn finished around 6-7c higher, with wheat up around 4-5c.

Crude oil is back above $50/barrel as the situation in Gaza worsens and the Russian gas dispute with Ukraine spreads to other nearby countries.

Kuwait and Qatar announced that they will begin cutting oil shipments to Asia this month as part of the recently announced OPEC cuts.

For crude oil, for the time being at least, the focus seems to be shifting from demand to supply.

Whilst this is obviously beneficial for the grains, other fundamental factors such as drought concerns in South America are also playing a significant role in soybean's rally to three month highs.

Temperatures well into the 90's and only scattered showers are in the forecast this week for much of Argentina and Southern Brazil.

There seems to be a pick up in world demand recently too. Even if tenders have largely not been going the was of the US, export business still takes some of the surplus world supply off the market.

Pakistan and Iraq have both bought around half a million tonnes of wheat in recent tenders. Japan is in the market for US and Canadian wheat this week, and Jordan is tendering for 100,000mt optional origin wheat. South Korea are tendering for corn and the Philippines are sniffing for 300,000mt corn by the end of March.

China too continues to be in the market as the government there supports domestic prices to such an extent that feed mills there find it cheaper to buy from abroad. The USDA this afternoon announced export sales to China of 232,000mt soybeans.

A more significant factor than any of this though is that we are beginning to see the funds back in the market. I've been saying for a while now that with interest rates effectively zero, agricultural commodities are possibly seen as the best of a bad bunch, from an investment proposition.

Traditional large speculative traders now hold 14,424 net long positions in CBOT soybean futures and options combined contracts as of Dec. 30, compared with net longs of 7,315 in the previous week, according to CFTC.

Speculative funds are also being seen cutting their shorts in wheat, according to the CFTC.

Early calls for this afternoon's CBOT session: Corn Up 5-7c, Wheat Up 4-6c,Soy Up 15-20c.