Chicago Closing Comments - Tuesday

15/05/12 -- Soybeans: Jul 12 Soybeans closed at USD14.13, up 26 cents, Nov 12 Soybeans closed at USD13.05, up 10 1/4 cents; Jul 12 Soybean Meal closed at USD417.20, up USD13.70; Jul 12 Soybean Oil closed at 51.47, up 17 points. The soy complex rallied as fund money came back into the market, buying an estimated 8,000 beans, 3,000 meal, 2,000 soyoil on the day. Better than expected German growth just helped the Eurozone avoid slipping into an official recession in Q1 of 2012. That seemed to ease a few Eurozone fears, although there seems to have been little progress on Greece which appears to be heading for another election next month. Beans managed to shrug off weak crude oil and a firmer dollar, led by front month July gaining on old crop tightness in supply. Developments in Europe look set to dominate in the coming weeks, as they dictate whether fund money flows into, or out of, the grains sector.

Corn: Jul 12 Corn closed at USD5.97 1/4, up 14 1/4 cents; Dec 12 Corn closed at USD5.14 1/2, up 9 cents. Funds were said to have taken advantage of the recent price dip to buy around 11,000 corn contracts on the day. Regardless of what the futures market is doing, cash availability is tight and looks set to stay that way until new crop comes along. With US corn plantings at 87% complete versus the 5 year average pace of 66% and emergence well ahead of normal there is every chance that the harvest will begin earlier than usual this year. As with soybeans, this was a fairly decent performance given crude oil setting to fresh 2012 lows and the dollar strength. Also as in the case of soybeans, Europe probably holds the key going forward.

Wheat: Jul 12 CBOT Wheat closed at USD6.08 1/2, up 10 1/4 cents; Jul 12 KCBT Wheat closed at USD6.27 1/2, up 13 cents; Jul 12 MGEX Wheat closed at USD7.50 1/2, up 24 3/4 cents. Funds bought an estimated 2,000 Chicago wheat contracts on the day, perhaps surprised by the sharp drop in winter wheat crop conditions reported by the USDA Monday night, with Kansas falling from 60% to 52% good/excellent in just a week. There is some talk of "irreversible" damage to winter wheat in parts of Southern Russia. Kazakhstan is only expecting an average crop this year, after bumper production in 2011. They will export a record 13 MMT of grains in 2011/12, according to their Ag Ministry. Wheat remains very much a follower of corn and soybeans, and will be the first to come under harvest pressure with the combines expected to be rolling in Kansas within the next few weeks.