Nogger's Blog

21/10/10 -- The overnight grains were steadier in follow-through trade from last night's sharp gains. Beans led the way closing up around 6-8c, with wheat up 2c and corn up 1c. The weak dollar is helping to underpin the market.

Crude oil is lower and looks to be setting itself up to attempt to drop below USD80/barrel again.

The story of the day so far has to the weekly export sales report pegging soybean sales well above expectations at over 2 MMT, almost double last week's total. China took what is becoming their customary 75%, with sales of almost 1.5 MMT. Exports were also high at more than 1.6 MMT, the largest in a year.

By complete contrast corn sales were poor at just 212,500 MT, easily the lowest of the 2010/11 marketing year so far. That total is only around a third of what was expected and may lend some weight to the theory that current prices are rationing export demand.

Wheat sales were in line with trade ideas at 574,000 MT.

So despite early week jitters after the Chinese raised their interest rates, the market will continue to monitor weekly sales to see if this actually proves to be the case.

Trade talk that US corn has been sold to the Chinese this week may prove to be baloney. Most analysts now seem to think that this season's Chinese corn crop will come in around 10-15 MMT lower than current estimates from the USDA and CNGOIC.

Although they have been selling off state-owned reserves they've hardly been flying out of the door, with sales only averaging around 20-30% of what has been offered in recent weekly auctions.

Most pundits are also now projecting 2011 Chinese soybean imports of a record 55-60 MMT.

Soybeans remain "the big story" in my book.

"Despite a mature and strong La Nina in place, Argentina has seen plentiful rains this spring,leaving planting and crop condition in very good shape," say QT Weather.

The Argy Ag Ministry would seem to concur, raising their estimate for wheat production there to 12 MMT, a 60% increase on last season. Corn production is seen at a record 26 MMT.

Early calls on this afternoon's CBOT session: corn up 1-2c, wheat up 1-3c, beans up 6-8c.

It should be another interesting session with beans clearly in the driving seat, set to potentially move higher than the opening calls on the back of export sales. Will they drag corn up with them, can the both move independently or will corn force beans lower?