Early Call On Chicago

Posted by Nogger - a legend in his own mind at 14:11 | Categorized as

25/05/11 -- The overnight grains finished mostly a little higher with beans leading the way up 6-7c, corn up 3-5c and wheat 3-4c higher. NYMEX crude is down 66c to USD98.93/barrel and the dollar is a touch firmer.

On the US weather front it's a game of two halves. Beneficial rains have crossed the HRW wheat areas of Nebraska, Kansas and Oklahoma, say WT Weather. Yet rain continues to hamper spring wheat (and corn and soybeans too) plantings further north.

It's also still far to wet for timely spring sowing across the border on the Canadian Prairies.

For the Midwest of the US it's a case of things look pretty good for what is already in the ground, it's a question of getting what's left sown.

Some forecasts are calling for below normal rainfall with much above normal temps in the May 29th to June 8th timeframe. That would be helpful to those looking to get their crops into the ground, and should also be conducive to good crop development for those that already have.

Nearby July contracts remain vulnerable to rolling of positions. Despite some recent liquidation open interest in July corn is well over half a million contracts, the equivalent of over 73 million tonnes! For July soybeans it's around 32.5 MMT.

South Korea has reportedly bought South African corn, saying US corn was too dear. The trade will be scrutinising tomorrow's export sales report for further evidence of demand switching away from the US, and in the case of soybeans evaporating entirely.

China has been rather conspicuous by it's absence lately. Domestic soybean stockpiles at the ports are still said to be at, or near, record levels.

Ukraine has lifted it's grain export quota system, and is issuing bullish statements about crop production and export prospects for 2011/12. Everyone is now eyeing Russia for a similar move.

Markets are expected to open higher, but I sense some nervousness, especially with a long weekend looming and the size of OI in July. Any faltering in early strength could signal another rush for the exits.

Early calls: corn up 3-5c, beans up 6-8c, wheat up 3-5c.