CBOT Early Call, It's All About Corn Today

The overnights closed firmer with beans up around 4c, corn around 5-7c higher and wheat up 4-6c.

Strong rumours that China has again bought US corn this week look set to underpin the grains complex this afternoon. The Chinese government-owned agency Cofco said it had bought six cargoes of US corn from Bunge overnight, according to media reports.

Other reports are talking of further shipments having been negotiated separately in addition to these and the 115,000 MT confirmed by the USDA last week.

There has been much talk recently as to the legitimacy of these sales, given China's distaste for all things GM (they don't mind a bit of melamine in their baby milk mind, but the thought of GM corn is abhorrent to them, apparently). Well, if it's a government agency doing the buying then that kind of suggests to me that the GM issue isn't going to be all that significant.

As we found out a few years ago with Indian wheat, the strict import regulations have a habit of magically disappearing when your need is pressing. Which also suggests to me that maybe China's corn stocks maybe aren't really as plentiful as the official numbers make out.

Reports abound that last year's corn crop was hugely overstated by the Chinese government. Bloomberg say that a survey commissioned by them, conducted by Geneva-based SGS SA, pegged Chinese corn production at 144.4 MMT in 2009. That's more than 10 MMT below what the USDA are still saying to this day, and almost 20 MMT beneath the official Chinese figures.

May corn closed at 1,960 yuan on the Chinese Dalian exchange overnight, that's equivalent to around USD279/tonne, far dearer than US corn even after paying freight and discharge costs. Cash prices in Shandong province are over 2,000 yuan according to the China National Grain and Oils Information Centre (CNGOIC).

Importing corn clearly stacks up, particularly into the drought hit south west of the country. How much will they buy? Clearly we could be talking potentially much more than the 300,000 MT that the USDA had them down to import in 2009/10 in their WASDE report released only yesterday.

The USDA's numbers turn out once again to be a load of old rubbish even before the ink is dry, what a surprise.

Meanwhile cool and wet conditions far away in the north of the country, where most of the nation's corn crop is grown (and where the bulk of old crop reserves are located), have got corn plantings off to a slow start for the coming season.

The Chinese appetite for soybeans also continues unabated, with the country likely to import a record 5.8-6.0 MMT in June, according to CNGOIC.

The trade will also be keeping an eye on developments in Argentina, where dock workers at the port of Ramallo are said to be disrupting operations in now familiar dispute over pay and working conditions.

There isn't a lot to get enthused about as far as wheat is concerned, except spillover strength from corn, but that will probably get dragged along for the ride this afternoon.

Early calls: corn called 6 to 8 higher; soybeans called 3 to 5 higher; wheat called 3 to 5 higher.