Early Call On Chicago

02/02/12 -- The overnight grains are lower with wheat down 8-10 cents, corn some 5-7 cents weaker and beans around 7-8 cents lower. Crude oil is a dollar or so easier, below USD97/barrel for the first time since before Christmas and the US dollar is a touch firmer.

The USDA reported weekly export sales of 518,900 MT of 2011/12 and 35,200 MT of 2012/13 for wheat - in line with trade forecasts. For corn they came up with 912,000 MT for 2011/12 and 63,000 MT for 2012/13 which was again in line with expectations for sales of 700,000 MT to 1.1 MMT. Soybean sales were poor at 308,400 MT for 2011/12 and 60,000 MT for delivery in 2012/13. Trade expectations were for sales of 450-750,000 MT.

Weekly wheat shipments of 454,500 MT were a bit better than of late, but once more didn't quite reach the level required to hit the USDA's full 2011/12 target of 25 MMT. They've fallen below the required level now for 15 of the last 17 weeks.

US ethanol stocks are said to be at their highest levels in more than eight months, a hangover no doubt from record production in the run-up to the expiry of the blenders tax credit at the end of 2011.

Jordan has bought 150,000 MT of unspecified origin wheat in a tender.

Freezing temperatures in Russia are not expected to cause much crop damage as most of the European part of the country is lying under 35cm of snow, according to the Federal Hydrometeorological Centre.

There's been no official announcement yet on the export situation in Russia, although the market is expecting something today. Reading between the lines of what has been said I don't think that they will be introducing an export ban.

Today's meeting regarding the export situation may be more of a review of the maximum volume that the government will be happy to see sold abroad. So don't be surprised to see the figure of 24-25 MMT getting increased a little.

Given that exports have slowed substantially, that domestic prices are said to have risen significantly and much of their remaining stocks are supposed to be held well away from the ports I think that they will be hoping that the market regulates itself. Introducing a second export ban in the space of two years could be seen as being too damaging.

Well below zero temperatures are on the cards for France, Poland and Germany today and through the weekend, raising concerns of crop damage there.

India has revised it's 2012 wheat production estimate up to a record 88.3 MMT, a 2.8% increase on last year. Harvesting begins next month.

The USDA has lowered it's Mexican corn production estimate by 2.1 MMT to 18.4 MMT due to drought. Imports are now forecast at 10.5 MMT from 9.8 MMT previously.

The longest "formality" in history drags on, with still no deal on the table between Greece and it's private bond holders.

A side issue, but one of interest nevertheless, is that the Baltic Dry Index has plumbed to a new all-time low of 651 today. The grain market will be hoping that the BDI isn't the great indicator for the health of the global economy and forecaster of the future for commodities that many say it is.

Early calls for this afternoon's CBOT session: corn down 5-6 cents, beans down 6-8 cents wheat down 8-10 cents.