Early Call On Chicago

10/04/12 -- The overnight grains saw beans close 8-10 cents higher, corn flat to up 2 cents and wheat 3-4 cents steadier. WTI crude is around half a dollar lower, Brent is a dollar or so easier.

The USDA numbers are out and are bullish for soybeans, and also a bit friendly for wheat too. For corn, leaving old crop ending stocks unchanged is bearish, even if nobody believes the 801 million number this month any more than they did last month.

Increased feeding of wheat sees US ending stocks cut from 825 million bushels to 793 million. World wheat ending stocks were cut by more than anticipated to 206.3 MMT.

The stand out is probably Brazil's soybean crop cut by 2.5 MMT to 66 MMT, lower than the lowest trade estimate, and before the ink is dry on that one we have just had CONAB chip in with an even lower number - 65.6 MMT. In contrast they've raised their corn production estimate to a record 65.1 MMT - 3.1 MMT above the USDA.

The early start to US corn plantings this year, and the possibility therefore of some acres in the south being harvested in late August, might help alleviate some old crop tightness.

The USDA also note that the "daily ethanol disappearance fell to a 23-month low in January pushing ethanol stocks to a new record high. Weekly EIA ethanol production data suggests average daily ethanol production during February and March has continued to fall."

Soybeans still look like the one with the most upside potential despite prices being at 7-month highs. Corn looks a bit bearish for the time being, and wheat may get dragged down with it, especially given that the USDA upped it's good/excellent rating for winter wheat three points to 61% last night & estimated spring wheat plantings jumped from 8% to 21% complete as of Sunday night, compared to just 3% last year and 5% on average.

Customs data shows that China imported 4.83 MMT of soybeans in March, up 38% from March 2011 and 26% more than in February. That puts Jan-Mar cumulative soybean imports up 22% on last year at 13.33 MMT.

Slap bang in the middle of all that, the USDA have just reported the sale of 165,000 MT of new crop soybeans to guess who under the daily reporting system?

Algeria have bought 125 TMT of optional origin durum wheat for May/Jun shipment. They are also looking for 50 TMT of optional origin milling wheat for Jun shipment.

Early calls for this afternoon's CBOT session are all over the place. I'll go for corn 6-8- cents lower, beans 10-15 cents higher, wheat up 3-5 cents.