Chicago Close - Tuesday

05/06/12 -- Soybeans: Jul 12 Soybeans closed at USD13.49 1/2, up 9 1/2 cents; Nov 12 Soybeans closed at USD12.77, up 8 3/4 cents; Jul 12 Soybean Meal closed at USD400.00, up USD3.90; Jul 12 Soybean Oil closed at 48.50, up 19 points. Funds were said to have bought around 4,000 soybean contracts on the day. "Weather conditions in the Midwest grain belt continue unfavourable for crop development with a dry forecast this week. Though temperatures have moderated somewhat, dry soil conditions prevail. Field moisture has steadily deteriorated with low rainfall in the past month," say Martell Crop Projections. With South America already well sold on it's 2011/12 crop the world is now largely reliant on this year's US soybean crop to see it through until 2013 and can ill afford any weather-related production set-backs.

Corn: Jul 12 Corn closed at USD5.67 1/2, down 1/2 cent; Dec 12 Corn closed at $5.07 3/4, down 16 cents. Dec 12 closed at the low of the day and now stands perilously close to trading under USD5.00/bushel, a level unseen since December 2010. Funds were estimated to have been net sellers of around 7,000 contracts on the day, possibly shorting corn and buying beans. Monday's crop condition report showed corn good/excellent ratings holding steady at 72% whereas the trade seemed to be expecting a reduction to 70%. The 6 to 10 forecast offers the chance of above normal rains for many, although recent such forecasts have generally disappointed. Conab raised their Brazil’s corn crop estimate to 67.8 MMT, thanks to a winter corn crop of 32.9 MMT, up 2.7 MMT from last month. Brazil's corn exports are seen rising on the back of this. FOB prices there offer significant discounts to US corn at the moment.

Wheat: Jul 12 CBOT Wheat closed at USD6.13 1/4, down 14 1/2 cents; Jul 12 KCBT Wheat closed at USD6.38, down 17 cents; Jul 12 MGEX Wheat closed at USD7.28 3/4, down 13 3/4 cents. Funds were said to have sold around 3,000 Chicago wheat contracts on the day. The US winter wheat harvest is well ahead of normal at 20% complete. Recent rains in Russia and Ukraine are hoped to have drawn a line under deteriorating crop prospects there, whilst there's rain in the forecast this week for parched Western Australia. The UK, France, Germany and Poland have also had some beneficial moisture in recent days boosting yield prospects in Europe. Dec 12 CBOT wheat closed at a USD1.50/bu premium to Dec 12 corn, that is going to see those that had been favouring wheat over corn in feed rations switching back to corn.