Early Call On Chicago

28/04/11 -- The overnight grains closed mixed with beans around 5-8c higher, corn up 3c on old crop to down 5c on new crop and wheat 3-4c easier.

The dollar is lower following last night's indication from the Fed that interest rates at an effective zero are to stay for some time yet.

Weather forecasts are just a little more conducive for a drying out phase in the corn belt, hence a slight weakening of new crop corn. Old crop remains steady on stocks tightness.

Weekly export sales for corn were disappointing at 349,000 MT of old crop and just 94,700 MT of new crop. That's the worst combined total of 2011 so far, and the lowest old crop sales volume since mid-October.

Soybean sales also came in below expectations at a combined 199,200 MT, whilst wheat sales were in line with trade ideas at 418,200 MT against expectations of 350-550,000 MT. China bought just one cargo of US beans this week - 55,500 MT of new crop.

I'm just starting to get a little uneasy about China. Firstly, there's been no confirmation at all of the widely-touted recent US corn sales to them. Secondly, they've now actually said that they intend to limit corn usage for industrial purposes. And thirdly, their "insatiable" demand for commodities is showing signs of having in fact been satisfied as imports slow.

There's talk of restrictions on corn usage for non-food purposes also being extended into soybeans too. Some estimates now peg China's soybean imports this year at around 53-54 MMT compared to the USDA's 57 MMT, that would be the first season that we've seen a year-on-year decline in imports since 2003/04.

As they continue to wrestle with inflation and a housing bubble, there's also talk of another Chinese interest rate rise looming over the weekend.

The booming Chinese economy has been the saviour of the commodities markets over the past three years since the slump of 2008, being almost single-handedly responsible for getting the show back on the road. What happens if the engine has seized?

Early calls for this afternoon's CBOT session: beans up 6-8c, corn up 2-4c, wheat down 2-4c.