Early Call On Chicago

Posted by Nogger - a legend in his own mind at 14:36 | Categorized as

06/06/11 -- The overnight grains finished lower with corn down 8-10c, beans down 6-8c and wheat falling 10-12c. Crude is lower on global economy fears and the dollar is broadly unchanged.

Weekend rains in northern France and central/western parts of Germany are the bearish catalyst today. More rain is forecast for both for the next few days with the SE of the UK and western parts of Poland also seen picking up varying amounts.

There's speculation that Russia may have more carryover stocks left from 2010 than official figures suggest. We've already seen them undercut US wheat substantially in one or two tenders in the past few days, with Ukraine then usurping Russia by coming in even cheaper.

That probably sets the tone for many of the tenders that will come out of the Middle East and north Africa for much of the remainder of 2011. Algeria seems to be still excluding Black Sea origin grain though, booking 600,000 MT of probably French wheat over the weekend.

Ukraine will produce will produce 43.4-48.7 MMT of grains in 2011 depending on weather conditions between now and harvest-time, say APK-Inform. They also have significantly larger than normal carryover old crop stocks. With a domestic demand of only 14.7 MMT there's going to be plenty to sell on the international market.

The US markets appear to be trading semi-oblivious to the notion that the balance of export power is switching back to the Black Sea, where price is an almost secondary consideration. What is going on in their own flooded (or parched) backyard is of far more importance.

The USDA will report on planting progress after the close tonight. Last week corn was 86% done, that should be in the 90-95% region today. Soybean plantings were only just past halfway, whilst spring wheat sowings were 68% complete. I expect to see bean plantings around the 70-75% mark tonight, leaving plenty of time left to get the remaining crop into the ground. Spring wheat planting delays in the northern Plains continue to see Minneapolis wheat, appropriately enough, paddle it's own canoe.

Early call for this afternoon's CBOT session: corn down 8-10c, beans down 6-8c, wheat down 10-12c.