Early Call On Chicago

09/03/12 -- The USDA report contained a bit of something for everyone, bulls and bears alike. Twitter is awash with conflicting suggestions as to whether this afternoon will have a bullish or bearish theme.

My take on it is that the soybean numbers are bullish overall, with slightly larger cuts than anticipated to the crops in South America. I think that the trade will shrug off the USDA leaving US ending stocks unchanged and cutting Chinese demand slightly.

The corn numbers are bearish, there's no two ways about it. A raise in output for Brazil, despite being hinted at by CONAB yesterday, was not expected and neither was production in Argentina thought likely to be left unchanged. US ending stocks weren't reduced at all, and although world ending stocks were it was not by as much as expected. Add in the fact that a bullish report was expected and that possibly "doubles up" the bearish nature of this report.

The wheat numbers look mildly friendly, but given that world ending stocks are now only marginally less than record highs and that for corn the report is bearish then I'd expect wheat to get dragged lower this afternoon.

Soybeans up, corn down taking wheat with it, that's how it looks to me. A situation not unusual this past few weeks. EU wheat seems to have moved a bit higher since the report came out though, so what do I know? Bear in mind also that soybeans are already heavily overbought and we do have a weekend coming up.

On the weather front "A more active subtropical jet stream is giving the Southern Great Plains winter wheat a good chance for rainfall. Texas and Oklahoma are expecting soaking rain over the next few days," say Martell Crop Projections.

"Rainfall of .75 inch is expected, but over 1 inch locally. On the other hand, the Kansas forecast is dry except perhaps the south-central district," they say.

Further north "temperatures in the northern United States are expected to turn unseasonably warm in the next several days. Sioux City, Iowa will reach the mid 60s F next week. The windy and warm weather would serve to dry out the topsoil in the Northern United States. Some fieldwork may even begin with a stretch of sunny open weather," they add.

Another influence this afternoon is that Informa are due out around an hour after the opening with their revised planting estimates. The recent price movements in beans relative to corn may see some additional soybean acres getting added.

Early calls for this afternoon's CBOT session: beans up 10-12 cents, wheat up 3-5 cents, corn flat to 2 cents firmer. Where we close will be of more importance than where we open.