Early Call On Chicago

31/01/12 -- The overnight grains were higher in classic Turnaround Tuesday style. Beans finished with gains of around 4-5 cents, corn was up 6-7 cents and wheat leading the way 10-12 cents firmer. Broad-based commodity buying sees crude rise more than USD2/barrel.

All those that forecast 2012 to be another year of great volatility in the grain markets have certainly got off to a flyer.

A ludicrously naive wave of optimism, which appears to be grossly underestimating the enormity of the European debt crisis, appears to the fore. Prudence has been swept aside by a tsunami of money searching for a quick buck.

Longer term I think you have to be bearish, but there'd have to be a strong element of King Canute in me in attempting to order back this particular wave.

It's been some time since every snippet of bullish information was seized upon with such vigour, but that is certainly the mood that the market seems to be in today.

Very cold in Russia and Ukraine. Buy, buy. Increased corn plantings in the latter resulting in likely record crop later this year. Ignore, ignore. Rains forecast every day this week in Argentina. Ignore that as well. Russia may, or may not, introduce some form of export restrictions at some indeterminate time in the future. Yes, let's have that on board. Buy, buy.

Comments from Greece that a deal is close (how long has it been "close", and what real good will it do anyway other than nurse Greece through to it's next cardiac arrest?) with private bond holders is being greeted as if the entire eurozone crisis has been resolved, aided by a bit of back slapping and palm squeezing in Brussels.

Early calls for this afternoon's CBOT session: beans up 4-6 cents, corn up 6-8 cents, wheat up 10-12 cents with exasperated sort-covering in the latter a feature.