Early Call On Chicago

16/03/11 -- The overnight grains were higher, rebounding from the steep losses of the past couple of days. Beans finished around 26-27c higher, with wheat up 21-23c and corn up 7-10c.

Crude oil is offering support, up USD1.50-2.00 and metals and other outside influences are also firmer.

All eyes remain on Japan and developments at the Fukushima nuclear facility, you wouldn't want to rule out this market rapidly changing direction one way or the other depending on events there.

This area is responsible for around 17-20% of Japan's feed manufacture, according to media reports. These stories also suggest that capacity can be increased elsewhere to make up for any shortfall in feed availability. Exactly how production can be ramped up in the south faced with power shortages is however unclear.

There are lots of other uncertainties too, lsuch as damage to the local infrastructure like ports and transport networks not to mention the possible implications on livestock numbers not just from the tsunami itself but also the evacuation of farmers leaving their animals behind, and possible radiation contamination.

Has fund liquidation ceased for now? Right now it seems like the answer is yes, but that doesn't exclude the possibility of another wave of selling at the drop of a hat depending on international events.

Japan has deflected much of the markets' interest away from the Middle East and North Africa it seems, as the violence spreads to Bahrain.

Other market fundamentals are for now very much playing second fiddle. Brazil's soybean crop may not break 70 MMT after all as rains continue to hamper the harvest, and the US winter wheat crop is in a pretty sorry state too.

Early calls for this afternoon's CBOT session: Beans up 20-25c, wheat up 20-25c, corn up 8-10c.