Early Call On Chicago

10/05/12 -- The overnight grains were mostly higher with beans leading the way up 14-18 cents. Corn was up almost 10 cents nearby but generally a cent or so easier further forward, wheat was 3-4 cents higher.

The big news of course was the raft of USDA numbers. Catching the eye immediately was a surprise 50 million increase in old crop US corn ending stocks, from 801 million bushels to 851 million. The most optimistic trade estimate was for these to be left unchanged from last month, nobody was forecasting an increase. US wheat and soybean stocks were cut by a bit more than anticipated, but nothing startling.

World corn ending stocks for the current marketing year also got a boost, being raised from 122.7 MMT to 127.6 MMT. The trade was expecting a decline. Also catching the eye was a much larger than expected cut to world wheat ending stocks in 2011/12, from 206.3 MMT to 197.0 MMT.

South American soybean production estimates fell into line with trade guesses, with Brazil's crop cut by 1 MMT to 65 MMT and Argentina's reduced by 2.5 MMT to 42.5 MMT. Further cuts to the latter are surely likely next month.

Brazil's corn production estimate was raised 5 MMT to 67 MMT, another bearish surprise for corn, although other analysts have also recently been upping their forecasts for corn output here.

Argentina's corn crop was left unchanged at 21.5 MMT, contrary to expectations for a 0.8 MMT reduction.

Kansas was forecast to produce a 387 million bushel winter wheat crop this year, 40% up on last year. The US all wheat crop was estimated at 2.245 billion bushels, more than expected and 12.3% up on last year.

As well as all that the USDA also gave us the usual weekly export sales numbers which, sticking with the above theme, were bearish corn and bullish soybeans. Corn sales were 224,200 MT old crop and 249,200 MT new crop, well under the combined 1.1-1.3 MMT that the trade was expecting.

In contrast soybean weekly sales were 466,500 MT for old crop and a hefty 1,360,500 MT for new crop giving a combined total of 1,827,000 MT versus expectations of 1.2-1.4 MMT. It should be noted that China accounted for more than 1 MMT of the combined total.

Wheat sales were in line with trade ideas of 450-750 TMT at a combined 550,500 MT.

The numbers are bullish for soybeans, negative for corn and neutral to slightly friendly for wheat, although the latter may get dragged down by corn. Early calls for this afternoon's CBOT session: old crop soybeans up 10-20 cents, new crop up 20-30 cents; corn flat old crop and 10-15 cents lower on new crop; wheat flat to 5 cents lower.