Very Early Call On Chicago

02/05/12 -- The overnight grains are currently lower with beans down 7-9 cents, corn 3-4 cents weaker and wheat down 6-8 cents. Crude oil is also lower.

Fresh news is scarce once again, with some countries still closed for business following May Day yesterday.

On the tender front South Korea have bought 58,000 MT of US corn for October delivery, Taiwan has bought 56,500 MT of US wheat for June deliver and Lebanon is tendering for 50,000 MT of milling wheat also for June arrival.

China says that it will allow Argy corn into the country (beggars can't be choosers can they?). There had previously been quarantine issues with corn from the South American nation.

The first day of the Kansas crop tour yesterday found a yield potential of 53.6 bushels an acre, much better than the 40.7 bushels an acre average over the last three years on the first day and higher than the record yield for the state of 49 bushels an acre set in 1998.

Whilst nobody is predicting that the state average will ultimately come in that high this year it does show that there is potential for a very good wheat crop in what is the largest US wheat producing state.

State-wide yields last year were only 35 bushels an acre.

US corn plantings are off the the best possible start pressuring new crop. The trade seems to be thinking that this early progress will mean fewer acres getting switched into soybeans than may have been the case otherwise.

The likelihood of an early wheat harvest will see some double cropping going on with prices where they are, this could boost the final corn & soybean area from current USDA projections, which would be bearish for corn in particular given that the current forecast area is already the largest since 1937.

For beans I'd say it's less bearish as the USDA's March planting intentions report gave us more than a million acres fewer in 2012 than last year, and taking into account the subsequent South American losses.

Michael Cordonnier's 40 MMT estimate for Argentina yesterday now stands fully 5 MMT beneath the USDA's April number. The USDA are out a week tomorrow with their revised May WASDE report.

Euro-zone unemployment hit 10.9% in March - the highest since the euro was formed in 1999. Even German unemployment rose last month. That has put the euro back under pressure again today and sees the dollar strengthen, pressuring the grains.

Very early calls for this afternoon's CBOT session: Corn 1-2 cents lower, soybeans and wheat 4-6 cents lower.