Early Call On Chicago

Posted by Nogger - a legend in his own mind at 13:19 | Categorized as

27/03/12 -- The overnight markets are a little higher with beans and corn up around 4-6 cents and wheat around 2-4 cents steadier. Crude is a little lower but Brent remains above USD125/barrel whilst NYMEX WTI hovers around USD107/barrel.

It's warmer and drier than normal both sides of the Atlantic. Winter wheat crop conditions in the US are way ahead of last year and crop development is at least a couple of weeks ahead of normal.

Kansas wheat is has jumped to 59% good/excellent, up from 54% last week. Oklahoma's crop is in even better shape, with 75% of it rated in the top two categories compared to 70% a week ago. Last week's rains clearly did plenty of good.

It's wheat conditions and production potential this side of the pond that is getting all the attention though, with Spain the primary concern, although the UK and northern France are also major worries.

Even so the EU Commission's MARS unit say that EU-27 wheat yields will come in slightly higher than last year at 5.41 MT/ha. Spanish yields are seen down 14.2% for all wheat, with durum yields falling by almost a third. Romania is also flagged up as suffering with wheat and barley yields both down around 21%.

Whilst US conditions look largely very favourable now things could still turn nasty in April. Then there's a whole summer of potential weather scares waiting. If the funds fancy it, and it looks like they do, who knows where prices might go if things turn shitty - particularly for soybeans which appear to have the most upside potential to me.

Meanwhile, the trade is positioning ahead of Friday's USDA reports. Trade estimates for the US corn acreage average 94.7 million acres, up 2.8 million or 3% from 2011. Estimates range from 93.6 to 95.6 million acres.

For soybeans the trade is forecasting 75.5 million acres, only half a million up on last year, despite prices close to USD14/bushel.

Regardless of what the USDA say on Friday, longer term price direction is all about fund money. Yesterday they were said to have sold around 10,000 corn contracts and been net buyers of 9,000 lots of soybeans and 4,000 lots of wheat. Corn went down and beans and wheat ended higher. Simple!

The USDA have just reported the sale of 120,000 MT of new crop soybeans to their favourite buyer, China.

Early calls for this afternoon's CBOT session: wheat up 2-4 cents, corn and beans 4-6 cents higher.