The Early Vibe - Oilseeds Lead The Way Higher

06/12/12 -- The overnight grains are mostly higher, with beans 8-10 cents firmer, corn flat to a cent better and wheat 3-4 cents higher.

The soy complex appears to have found a new lease of life, underpinned by either rumoured or actual Chinese business. With South American crops still going into the ground and Brazil already experiencing loading delays in corn - even with virtually no soybeans to be shipped - and Chinese New Year approaching I think we can expect demand from the Far East to remain focused on the US from a supply perspective for a while longer yet.

This afternoon's weekly export sales and shipment stats will be interesting, and are likely to confirm that this season's US soybean campaign is going to be heavily skewed in favour of the front end.

It will not have escaped Chinese buyers' notice that they'd better get some decent reserves in hand for when the inevitable shipping delays start in South America come harvest time. It will not have escaped the notice of Brazilian and Argentine truckers, stevedores, dockers, customs workers, Uncle Pedro Cobbley et al that the Feb/May period may be a good one to demand a pay rise. Or for Argy farmers to demand a tax break.

Further support for soybeans should also come from lower Canadian canola production, pegged by StatsCanada yesterday at 13.3 MMT, a 9% decrease on last year and below the 13.7 MMT the trade was expecting. That's lead some to describe the Canadian 2012/13 ending stocks situation as "astoundingly tight".

Canadian canola futures in Winnipeg closed at more than 4-week highs last night, posting daily gains of around CAD10-12/tonne.

Rain continues to hamper Argentine soybean and corn plantings, and also causing further delays (and probably quality downgrades) to the wheat crop there. The Argy Ministry cut their forecast for wheat production from 11.5 MMT to 11.1 MMT earlier this week, but some local analysts are forecasting a crop of less than 10 MMT. Quality is also expected to be pretty ropey too.

Hence Brazil's recent German wheat buy, and rumours this week that they are now looking at US wheat to fill the void left by a shitty wheat crop of their own and near neighbour Argentina.

A reminder that Conab are out later today with their estimates on Brazilian crop production for 2012/13.

Japan have bought 196 TMT of mostly US wheat in their regular weekly tender.