Early Call On Chicago

Posted by Nogger - a legend in his own mind at 14:27 | Categorized as

17/05/12 -- The overnight gains were mixed with wheat up 2-3 cents, beans 11 cents higher nearby to 5-7 cents firmer further forward and corn 1-4 cents lower.

Crude is a bit firmer for once, but so too is the US dollar.

The USDA's weekly export sales report came in at a combined 865,100 MT for corn, towards the low end of expectations of 800 TMT-1.4 MMT; Soybeans were well below trade ideas at 673,400 MT vs the 1.1-1.6 MMT expected; Wheat was OK at 711,400 MT vs 400-850 TMT expected.

One of two of last night's newswires included the word "Sukhovy" - the infamous hot wind that helped slash Russian grain production two years ago. Nobody seems to be saying that this weather phenomena has struck yet, but that there is potential for it to do so. With funds holding a near record short in Chicago wheat and memories of wheat prices doubling in the second half of 2010 it's not surprising therefore that wheat posted 30 cent gains last night.

Stategie Grains meanwhile have chipped in with a 4.2 MMT cut to EU-27 soft wheat production, meaning that they've lopped 8.5 MMT off their forecasts in the past two months.

Jordan has bought 50,000 MT of wheat of unspecified origin in a tender. Japan has bought 500,000 MT of of South American corn for July-Sept shipment, and has more to buy. The Philippines are buying Australian feed wheat.

Helping support the already tight old crop soybean situation this afternoon will be the USDA announcing the sale of 480,000 MT to China. They've also reported the sale of 100,000 MT of new crop HRW wheat to Iraq which was already publicised earlier in the week.

The former is a pretty large sale for US beans at this time of year, suggesting that there isn't much on offer out of South America already, or at least that the pipeline is full.

Macquarie Group meanwhile say that they believe that soybean prices will peak "in the June-August period when global supplies will be tightest" - July is the seasonal favourite peak month for CBOT beans.

US weather is seen turning warmer/drier, which shouldn't initially be a problem but could quickly get turned into one.

As ever, keep an eye on European developments. Yields on Spanish bonds were sharply higher today. They had to pay 4.373% on bonds maturing in Jan 2015 versus 2.89% last month. Apr 2016 bonds were 5.106% versus 3.374% in March.

Early calls for this afternoon's session: corn flat to 2 cents lower, wheat up 2-3 cents, beans up 6-12 cents.