eCBOT Close, Early Call, GM Look Set For Bankruptcy

The overnight grains closed higher, with July soybeans hitting eight-month highs just shy of the $12 mark at $11.96 1/2, closing just under that at $11.96 1/4 for a net gain of 10 3/4 cents.

July wheat closed the session 5 3/4 cents higher with corn 3 1/4 cents firmer.

Spillover strength from outside markets added support, with crude oil trading around the $63/barrel mark. A weaker dollar was also supportive.

Beans continue to benefit from the tightness of old-crop stocks. Everyone keeps talking about China switching to Brazil and/or cancelling/deferring US purchases, but all it is at the moment is talk, The hard evidence is that they keep coming back week after week to buy more, and week after week beans continue to pour out of America.

Reports of drought and reduced plantings in China’s Heilongjiang province, the country's top producing region by far, is also a cause for concern.

US farmers made sterling efforts to get their crops into the ground last week, with a dry period providing many with a window of opportunity.

Corn plantings advanced 20 points from a week ago to 82% done, although that still lags the five year average of 93%, it is in line with expectations. Illinois in particular is well behind at 62% complete, compared to 96% normally. Indiana is also well behind.

A dry window and 80-degree temperatures for 7-10 days ended Sunday and it has rained in this region ever since. More rain will fall today, this weekend and most of next week, keeping southern Illinois and southern Indiana on the radar screen, says Allen Motew of QT Weather.

Nationally, US farmers got another 23% of intended soybeans planted, making the crop 48% planted overall, compared to 655 normally. Again this was bang in line with trade expectations.

Spring wheat is 79% done, exceeding the 70-75% expected, but well behind the five year average of 95% complete. With soybean prices where they are there must be a strong temptation now to give up on wheat hopes and think about switching to beans.

For winter wheat crop conditions declined to 45% good-to-excellent condition, three pips down on last week, contrary to expectations of a one or two point increase. There are increased reports of failed wheat being destroyed in Kansas, Oklahoma and Texas to claim the insurance money and replant with alternative crops.

Dryness is a problem for wheat crops in Eastern Europe and Spain, and is also delaying plantings in Australia. Argentina? Don't even go there, sister.

Equities were strong Tuesday with Wall Street closing sharply higher. Breaking news just coming in that GM have failed to get enough bondholders to agree to swap their debt for company stock, looks set to see GM file for chapter 11 bankruptcy Monday. That may dampen the earlier mood of enthusiasm sending US stocks into a tailspin this afternoon. Watch out that grains don't get caught in the crossfire.

Early calls for this afternoon's CBOT session: Corn 1 to 3 higher, Soybeans 10 to 12 higher, Wheat 5 to 6 higher.