Early Call On Chicago

09/01/12 -- The overnight grains were higher, reversing Friday's losses in beans and doing even better than that for corn and wheat. Trade talk is that there's less rain in the forecasts for Argentina than there was. That's true, see the story below, although the difference isn't too striking to me.

"Argentina will receive very beneficial moisture during the next few days, producing near 90% coverage," is one story I read this morning. Yet moisture stress is continuing to cause "irreversible yield loss for at least 75% of early-planted corn" is another.

It's up to the market to decide who to believe. There are plenty of people out there willing to suggest what the USDA may or may not say on Thursday. Some are anticipating a bullish report and others expecting a bearish slant. Only time will tell, personally I've given up trying to second-guess them.

What I can tell you is that last season's January report was almost universally bullish, especially on corn which touched limit up that particular afternoon. In that report they cut US yields and production by more than anticipated, with yields coming in 1.5 bu/acre below their December number and lower than even the lowest trade estimate.

The year before they went for the opposite tack and surprised the market pegging US 2009 production at a record 13.2 billion bushels, with a yield of 165.2bu/acre that beat the previous record by the proverbial country mile. March corn futures closed at just USD3.92 1/2 that day, down the at the time daily limit of 30 cents.

In 2009 they pegged carryout for corn, beans and wheat significantly higher than had been expected. Corn closed limit down again that day, and in delivery and therefore limitless Jan beans fell 83 1/2 cents!

So although we don't know which way the market is going to go on Thursday, history tells us that the potential is there for it to go very sharply one way or the other.

Fresh news is thin on the ground ahead of the will it won't it rain and USDA stories.

The USDA have announced the sale of 145,000 MT of 2011/12 soybeans to unknown this afternoon.

Morocco is shopping for 190,000 MT of what will probably end up being French wheat.

The euro is hovering around 1.27 against the US dollar, if it goes through 1.26 then it will be close to it's lowest since the summer of 2010 against the greenback.

Spec money appears to be flooding back into the grains. Agrimoney report their net long in Chicago corn "soared by nearly 44,000 lots to 192,500 contracts" in the week to January 3.

Will the weather in South America and the USDA reaffirm their actions?

Early calls on this afternoon's CBOT session: corn up 7-9 cents, beans up 9-10 cents, wheat up 8-12 cents.