Early Call On Chicago

14/03/11 -- The overnight grains closed lower on continued fallout from the devastation in Japan where there's been a second reactor explosion this morning. Beans ended around 10-15c lower, with corn down 5-7c and wheat in the region of 6-8c easier.

Crude is offering no support at around USD2 lower.

Japan is America's largest corn customer, it's second biggest wheat buyer and is third in it's soybean rankings. Some media reports are suggesting that recent events are bullish in the long run. That they may be, but the market is more concerned with the shorter-term right now.

Whilst many newswires are carrying stories that grain shipments to Japan will hardly be affected, and in some cases that they may actually increase to maintain food security, they seem to be ignoring the damage to the local infrastructure and the problems created by power rationing.

The financial implications for the world's third largest economy will be long-term, it could also be argued.

On the global weather front a big warm-up is on the way for the Canadian Prairies, which will be welcomed with spring plantings now only six weeks away. The Midwest Corn Belt is trending warmer too, which is good, although the 6-10 day forecast also includes wetter than normal conditions which will be less welcomed, say Martell Crop Projections.

Signs that La Nina is dying out will also bring welcomed warmer weather for northern and eastern Europe, Russia and the Chinese Manchurian Plain, they say. "The faster that La Nina dies out the better the chances for timely spring planting in northern grain growing areas," they add.

US HRW wheat is still suffering from drought and rainfall this week in the Southern Great Plains "would be generally under 0.30 inch and scattered," they warn.

Elsewhere, Argentina received widespread beneficial rains over the weekend and Brazil's harvest weather outlook finally seems to be improving.

Jordan are tendering for 100,000 MT of wheat and a similar volume of feed barley.

EU grains are all sharply lower.

A lower close tonight for corn would be its seventh in a row, and for wheat it would be a sixth. That's what's being forecast as money continues to flow out of "riskier" assets like the grains.

There will certainly be some thinking that there is a buying opportunity here, but whilst funds continue to take cash off the table the path of least resistance remains lower not higher.

Early calls for this afternoon's CBOT session: Beans down 10-15c, corn 5-7c lower and wheat down 6-8c.