Early Call On Chicago

19/11/10 -- The overnight grains closed a choppy session lower on news that China was to raise bank reserve requirements by 1/2%, effective from November 29th.

Grains had traded higher ahead of the news, but sold off late with beans closing 15-17c lower, corn down 5-7c and wheat around 5c easier.

The trade is feeling that the Chinese news is just the first of several moves aimed at reining in inflation, with an interest rate hike also possibly on the cards over the weekend. Whether that will really harm demand for commodities from the world's second largest economy is debatable, the point for now is how does the market percieve it will affect demand for commodities.

Russia is likely to remain out of the global grain export market until well past the 2011 harvest, possibly into 2012, according to various trade gossip. That could be right, as they will doubtless want to see the 2011 harvest come to a conclusion, at the very least, before making a decision. There will also be a need to replenish stocks depleted this season, and there are still legitimate concerns over the well being of the newly planted crop to withstand the worst of the Russian winter yet.

The euro is up on reports that EU and Irish officials are in talks to thrash out the details of a massive credit line for Ireland's debt-crippled banks over the weekend.

The weather outlook in Argentina is finally improving. "Last night, rains started falling heavily across N Argentina and continue today, with much more on the way over the next 6 days. Totals have all ready been heavier than earlier expected," say QT Weather.

Early calls for this afternoon's CBOT session: beans down 13-15c, corn down 5-7c and wheat 4-6c lower.