Early Call On Chicago

Posted by Nogger - a legend in his own mind at 14:34 | Categorized as

09/05/12 -- The overnight gains see beans more than 17 cents down nearby with new crop Nov 12 falling 12 1/2 cents. Corn is unchanged to 3 1/2 cents lower and wheat is down around 3-6 cents. Crude is extending it's losing run to day six, down more than a dollar to USD95.85/barrel, which is over ten dollars below where it closed on the first of the month.

Greece is the word, a Euro exit, a return to the drachma and a messy default has perhaps never looked more likely than it does now. That's why we are seeing fund money pulling out of soybeans despite underlying bullish fundamentals.

Beans are where the bulk of their grains length lies, so that is the one that is most under pressure with the overnight market seeing front month May 12 fall to USD14.20/bu, more than 80 cents below where it was at the end of April.

Yet South American production estimates are falling on a weekly basis, with Oil World yesterday cutting their Argentine soybean forecast by 1.5 MMT and warning that a downgrade for Brazil was also likely. In addition China/unknown are buying US soybeans on a daily basis.

There is now also the risk of an Argentine dock workers strike kicking off as early as tomorrow.

Going into new crop things look bearish for corn and wheat in particular.

Trade estimates for tomorrow's US 2011/12 stocks report are: Corn 758 million bushels vs the April USDA estimate of 801 million; Soybeans 221 million vs the USDA's 250 million last month; Wheat 781 million vs the USDA's 793 million in April.

For 2012/13 US corn stocks are seen rising to 1.704 million bushels, with soybeans falling to 170 million and wheat climbing to 805 million.

In South America the trade is looking for an Argentine corn crop of 20.7 MMT (vs 21.5 MMT last month) and a Brazilian corn crop of 62.7 MMT (from 62.0 MMT). Argentine soybean production is thought likely to fall to 42.0 MMT from 45 MMT and Brazilian soybean output seen at 65.5 MMt from 66.0 MMT

Further fund selling of soybeans ahead of tomorrow's USDA reports looks likely this afternoon, with early calls: beans 14-18 cents weaker, corn down 3-4 cents and wheat 4-6 cents easier.