Wednesday Morning Roundup

The overnight eCBOT markets are lower Wednesday morning on follow through from last night's CBOT close, weaker crude and a firmer dollar.

Crude oil is down $1.22 at $47.93/barrel ahead of US stocks data later today expected to show inventories at their highest levels since 1993.

The US dollar extended gains against the euro and the pound as Asian and European stock exchanges followed Wall St lower on concerns about the impact of deepening global recession on the upcoming round of earnings reports.

The USDA releases its revised WASDE and US stocks data tomorrow. Further cuts can be expected to soybean production in Argentina, and a tightening old 2008/09 ending stocks in the US.

The cut in the size of the Argentine crop and nervousness over the ongoing dispute between the government and farmers there may keep major importing countries like China reluctant to commit to making too many purchases in that direction. That may keep the door open for US sales a little longer than normal.

The Chinese government however are expected to soon start winding down their domestic purchases of soybeans and corn, which may mean that local crushers and feed mills may scale back their buying of imported material.

Iraq bought 100,000MT of US wheat overnight, despite a $30+ price disadvantage to Russian wheat. this may signify that top quality Russian supplies are dwindling. Egypt has shown a few signs this past couple of weeks that it too may be having to spend a little bit more money elsewhere to at least get some high-grade wheats to mix in with some Russian material.

It is still to early to accurately predict the true impact of a severe drop to sub-zero temperatures in the Southern Plains on this season's US wheat crop. It certainly seems likely that some damage has been done with temperatures plunging to 10-12 degrees F in parts of the top wheat producing state of Kansas Monday/Tuesday.

Significant losses are also possible in Oklahoma, where wheat development was most advanced, with eighty six percent of the state's wheat crop jointing, according to StormX.

Further east & north it remains largely too cold and/or wet to crack on with plantings just yet. The Dakotas are still on flood alert which will also delay plantings, and possibly wipe out intentions for up to a million acres of spring wheat sowing according to some reports.

In the longer run, the current US weather pattern could mean more beans and less corn & wheat going into the ground. With farmers able to plant beans up until the end of June, and the associated lower inputs, last week's USDA estimate of 76 million acres could yet prove to be on the low side.