Early Call On Chicago

19/01/11 -- The overnight grains closed firmer, led by wheat which finished with gains of 10-14c and beans which were up around 16-17c. Corn was more of a follower ending 5-6c firmer.

Wheat is up on heightened concerns over buying, indeed stockpiling, from North Africa and the Middle East.

China only sold 3% of the wheat on offer in today's government auction, but right now that doesn't seem to matter. French wheat has set fresh contract highs as exports pick up again after a lull over Christmas and New Year. UK exports have already exceeded their target for the entire 2010/11 marketing year.

Suddenly everybody wants to buy wheat, and they aren't too bothered what the price is as long as they get the order in the book. If it's like this now, what is it going to be like come spring when EU stocks start to get really tight?

Meanwhile Chinese wheat is too dry, and so too is US wheat on the Plains and Russian wheat in the south.

China's state-owned entity Sinograin sold almost 84 MMT of domestic grains and oilseed stocks in 2010, according to local media reports. They apparently only bought less than 35 MMT on the local market with which to replace those sales. Suffice to say that leaves a large gaping hole in their strategic reserves. The market believes that they will start to plug that hole soon.

Oil World have dropped their Argy soybean forecast to 46 MMT, 16% down on last season.

Rains have become more widespread in Argentina over the last 48 hours, but many believe that the damage may have already been done, particularly in the case of corn.

Early calls for this afternoon's CBOT session: corn up 5-7c, beans up 15-17c, wheat up 13-15c.