eCBOT Close, Early Call

The overnight markets closed mixed, with beans around 3-4 cents higher, corn flat either side of unchanged and wheat just fractions of a cent easier.

The dollar and crude oil haven't been showing a lot of change either this morning, for once, although that might be about to change.

Data just out reveals that US jobless claims rose last week by 36,000 to a seasonally adjusted 482,000. Analysts had been expecting a 4,000 decrease. That could send the dollar higher this afternoon, depressing the grains sector.

The sharp decline we've seen in prices since last Tuesday's USDA report seems to have been arrested, at least for now. Some pundits are suggesting that prices have fallen too far, too quick, and that this presents a buying opportunity. Others that we have merely paused for breath before continuing the downwards spiral.

I'd have to say that I fall into the latter camp.

At this exact moment in time crop prospects in South America look generally very promising. There is some talk of too much rain in Brazil increasing rust reports, but this can be controlled with adequate spraying. With bean prices having held up nicely for a large part of the last twelve months there should be enough money in the kitty to cover the cost.

China will surely be switching it's buying attention to South America before very long. That said, the USDA today have announced private exporters sold 230,000 MT of mostly 2010/11 crop soybeans for delivery to China.

Corn production in China might be significantly lower than estimates from the USDA and the Chinese government, but I don't see that being a precursor to start importing.

Taiwan is seeking 40,000 to 60,000 MT of either US or Brazil corn, and South Korea is looking for 55,000 MT of any origin corn. Taiwan purchased 48,000 MT of Brazil soybeans overnight and Japan bought 111,000 MT of mostly (86,000 MT) US wheat.

Other orders for US wheat are few and far between, with Russia now making inroads as far afield as Brazil, highlighting how wide it is now able to cast it's export net.

The usual Thursday export sales report from the USDA is delayed until tomorrow due to Monday's holiday, wheat exports in particular could be in for another poor week.

Canadian farmers will plant less of the grain for the 2010/11 harvest, reducing output to around 24 MMT, according to early estimates from the CWB. They're obviously taking a leaf out of their US counterparts book.

Unfortunately this isn't the case in Europe, where Strategie Grains see the soft wheat area 1% higher, and production up 3% in the season ahead. Corn output will also rise, by 2% they say, with barley production decreasing by 6%.

Early calls for this afternoon's CBOT session: corn called mixed; soybeans called 2 to 4 higher; wheat called flat to 2 lower.