Early Call On Chicago

Posted by Nogger - a legend in his own mind at 14:20 | Categorized as

04/10/11 -- The meltdown in grains continues with the overnight Globex market closing 12-14 cents lower on beans, 10-12 cents lower on corn and down 8-10 cents on wheat. Crude is down almost two dollars at USD75.68/barrel.

Risk aversion is the buzz phrase once again, with the usual suspect of Greece the main cause for concern after EU finance ministers put off a decision on handing over the next slug of bailout cash.

It would seem that we've now got to wait another month to see IF Greece does get the funding to stop it defaulting in November. That's a long time in the grain markets. If we were to see the falls of the past month mirrored in the one that lies ahead then we'd be looking at corn at four dollars a bushel and soybeans at nine dollars a bushel by the end of October!

On the fundamental front we've got Russia's grain harvest now standing at 89.5 MMT, with 12% of the planted area still left to cut. Wheat accounts for 55.8 MMT of what has been harvested so far and barley 17.1 MMT - the latter being 1.6 MMT higher than the USDA's current estimate.

The corn harvest in Ukraine is now in full swing at 28% complete, producing 5.5 MMT so far - implying a crop of 19.6 MMT versus the USDA projection of 18 MMT.

Australia is seen having a record volume of wheat to shift in 2011/12 by virtue of heavy carryover stocks from last season. A lot of those stocks are feed wheat. Early harvest results out of Queensland are said to be a bit disappointing, which may mean those feed wheat stocks will be getting added to this year, which would be bearish for corn.

StatsCanada peg all wheat production there this year at 24.16 MMT, 1 MMT up on a year ago and slightly higher than their previous estimate and the latest USDA figure.

FCStone are bullish on US corn and soybean production prospects pegging this season's corn yield at 148.7 bu/acre, up 2.4 bu/acre from their previous estimate. Their soybean yield figure is now 42.8 bu/acre, 1.75 bu/acre up on a month ago. Both numbers are also higher than last month's USDA estimates.

Early calls for this afternoon's CBOT session: corn down 10-12 cents, wheat down 8-10 cents, beans down 12-14 cents.