Early Call On Chicago

Posted by Nogger - a legend in his own mind at 14:27 | Categorized as

12/04/11 -- The overnight grains closed lower with wheat down around 11-13c, corn off 5-7c and soybeans 8-10c easier. Another earthquake in Japan overnight and the increase of the severity rating of the nuclear crisis there to 7 spooked the market.

Golden Sacks are recommending cashing in a few chips at these levels for many commodities. "Although we believe that on a 12-month horizon the (commodity) basket still has upside potential, in the near term, risk-reward no longer favours being long the basket and we are recommending closing the position," said Goldman commodities strategist Jeffrey Currie.

Brent crude is down a dollar and a quarter and NYMEX has fallen more than two dollars. Gold and most other metals are also weaker.

Last night's crop conditions report rated Kansas wheat 37% poor-very poor, the worst early April condition report since 2002 when wheat was 40% poor-very poor, according to Martell Crop Projections.

"That year only 270.6 million bushels of wheat was harvested in the state, down 36% from the 1997-2001 average. Sixteen percent of wheat land was ploughed up compared with 5% normally in the top US wheat state," they add.

Reports continue to circulate of Chinese soybean cancellations and/or deferrals. Thursday's USDA weekly export sales report will be interesting to see if it throws up any evidence of this.

Also of interest will be the volume of corn sold in the past week, will there be any sign of price-rationing at these levels?

Personally I think that soybean sales will be poor and that corn sales will probably be pretty strong.

Brazil's harvest is now more than three-quarters done, and what's left to come in is down in the south where yields are bumper. "People down here are getting slowly desperate with big crop and not quite so big storage. Everything seems to be coming out of the fields at the same time and we’re not seeing anywhere near enough ships loading to help us out of the bind," says my man in RGdS.

Early calls for this afternoon's CBOT session: beans down 8-10c, wheat down 10-12c, corn down 5-7c.