Early Call On Chicago

18/01/11 -- The overnight trade closed with wheat around 15c higher, corn up 4-6c and beans 3-6c lower.

China may have cancelled a couple of soybean cargoes over the weekend due to negative crush margins, is one report doing the rounds which may explain beans performance this morning.

Even so, they will import 4.55 MMT of the buggers this month, up from a previous estimate of 3.35 MMT, according to their commerce ministry.

They only attracted buying interest for 174 TMT of corn in today's government auction apparently, less than 10% of what was on offer, and continuing with the recent trend.

Japan are shopping for their regular weekly wheat tender, looking for 149 TMT of US/Canadian wheat.

North Africa and Middle Eastern buyers are also in the market, with Algeria reported to have bought some 600,000 MT late last week, and rumoured to be still looking for more. They say that they are going to increase the amount of wheat that they sell at subsidised rates to local millers to help against food price inflation.

The market seems to think that the government there are caught between a rock and a hard place and may attempt to buy their way out of trouble. Booking large quantities of wheat, even at these levels, may be one way of doing it.

Of course they aren't the only African nation seeing such public reaction to the current situation, and others may also be forced into entering the market soon high prices or not.

Argentina got some rain over the weekend, but the soybean and corn crops there are far from out of the woods yet. Brazil is faring somewhat better, apart from the extreme south. AgRural upped their Brazilian soybean estimate to a record 69.7 MMT yesterday.

Argy farmers are on strike this week, disrupting grain supplies to the ports. It may only be a matter of time before dock workers decide to throw their tools down too if recent years are anything to go by.

Drought remains a problem for wheat in the top US producing state of Kansas. The accumulated moisture from October 1 to January 15 was only 2.51 inches - just 56% of normal - according to Martell Crop Projections.

The dollar is at or close to two month lows against both sterling and the euro. Concerns are mounting over the size of US government debt which has risen from USD7.6 trillion to USD14 trillion in the last five years.

Are we in for a period of prolonged dollar weakness? If so dollar-denominated commodities could go higher yet.

Early calls for this afternoon's CBOT session: Wheat up 13-15 cents, corn up 5-7, soybeans down 2-4.