Early Call On CBOT

16/11/10 -- The overnight grains closed lower across the board as the "Chinese Jitters" returned for the second session in three.

Malaysian palm oil closed 3% lower in Kuala Lumpur overnight, dragging Globex soyoil to end down around 160 points. Beans fell 25-28c, with corn down 8-10c and wheat off 6-8c.

Reports in the Chinese media of price controls on food commodities and the spectre of a drop-off in demand on the back of interest rate hikes, an appreciating yuan, clamp downs on commodity speculation and a further tightening on lending are enough to encourage some profit-taking from recent highs. In addition China's stock market fell 4% earlier overnight.

The stronger dollar and weak crude oil - down USD1.39 to USD83.47/barrel - are also bearish signals for today.

The market is also wakening up to the realisation that the renewal of the ethanol blenders tax credit, due to expire on Dec 31st, is not a foregone conclusion - especially given the strong showing by the Republicans in the recent mid-term elections.

For wheat and corn yesterday's USDA export inspections were poor. In the case of the former weekly export sales have been largely disappointing since we broke through USD5/bushel, suggesting that price IS rationing demand.

In the case of the latter, yesterday's reported 15.320 million bushels inspected for export fell well below the 25.7 million bushel average needed each week to reach the USDA’s current export projections.

Despite what the market might have you believe, neither global nor US wheat stocks are actually that tight, in fact they are amongst the highest of the last ten years:

The USDA report the sale of 119,000 MT of US soybeans overnight to "unknown".

Early calls for this afternoon's CBOT session: Beans down 25-30c, corn down 8-10c, wheat down 6-8c.