Early Call On Chicago

05/01/12 -- The overnight grains were lower with beans around 10-12 cents easier, wheat down 7-8 cents and corn down 6-7 cents. Crude is down and the dollar is higher, both negative for grains today.

At the moment we have a tug of war between the European debt crisis and drought in some parts of South America. Today it seems to be the ongoing problems in Europe that are winning.

The euro has hit a fresh 15-month low against the dollar today as Greece hints that it may default on it's debt and French bond yields are up on a month ago.

Rain is in the forecast for Argentina, but as ever it always seems to be 7-10 days from now that it's due to arrive, never tomorrow. Allendale have cut their Argy soybean crop estimate to 49 MMT, in line with the rest of the trade. The USDA said 52 MMT last month but seem certain to reduce that estimate next week.

Allendale left their Brazilian soybean estimate unchanged.

For corn they now predict Argy production 5 MMT below the USDA at 24 MMT, and for Brazil they cut the crop by half a million to 60.5 MMT. Both of those would still be record crops.

In the US, Allendale see winter wheat plantings at 2.2 million higher than the USDA at 42.85 million acres. They also say that second quarter usage was the lowest in their records dating back to 1975.

Farm Futures peg the 2012 US corn planted acreage at 93.6 million, with soybeans at 74.9 million and all wheat at 59.2 million.

For corn that's 1.7 million, or 2%, up on last year. For beans it's a 0.1 million drop and for wheat it's a 4.8 million, or 9%, rise on last year.

Clearly the South American story is the only thing propping this market up. We've risen a fair way since the middle of December so it looks like some consolidation is overdue today.

Early calls for this afternoon's CBOT session: corn down 5-7 cents, beans down 8-10 cents, wheat down 6-8 cents.