Early Call On Chicago

24/02/12 -- The overnight grains closed mixed with wheat 4-6 cents lower, corn down 2-3 cents and soybeans flat to 1 1/2 cents higher. Crude is up again and the dollar is a bit weaker.

The USDA's Outlook Forum suggests a record 362.5 MMT of corn coming out of the US this year, 40 MMT more than they've ever produced. Ending stocks for 2012/13 are seen more than doubling to 41 MMT.

Wheat production in 2012 is seen rebounding 8.3% to 58.9 MMT and soybean output is expected to come in at 88.5 MMT, up 6.4% on last year. Lower production in South America this year should mean the increased availability US soybeans will have a minimal effect on prices.

US 2012/13 ending stocks for soybeans are pegged at 205 million bushels (5.6 MMT), a reduction of 25% on this season. US wheat ending stocks next season are seen at 957 million bushels, or 26 MMT, an increase of 13% on this year.

Today's weekly export sales report came in at 840,800 MT for corn, at the low end of the expected range of 800,000 to 1,250,000 MT. China didn't feature as a buyer.

For soybeans old crop sales were a marketing-year high of 1,159,400 MT, with China taking around half of that (521,100 MT). There were also sales of 2,873,000 MT for delivery in the 2012/2013. Expectations were for combined sales of around 3.5 MMT.

Wheat sales of 701,600 MT were up 67 percent from the previous week plus an additional 55,800 MT for delivery in the 2012/2013 fell into line with expectations of 500 to 900 thousand MT.

The tug of war between mildly bullish/friendly soybeans and a more bearish slant going forward on wheat and corn continues. I'd expect new crop on the latter to come under particular pressure as we go forward - starting with this afternoon! The wheat fundamentals are bearish for both old and new crop.

Meanwhile, despite crude oil hitting nine month highs on the old reliable stalwart of "tensions in the Middle East" US ethanol stocks have never been higher at 21.5 million barrels.

Early calls on this afternoon's CBOT session: Beans mixed up 1 to down 1, corn down 3 to 5 cents, and wheat down 4 to 6 cents. I'd look for a weaker performance from new crop corn & wheat.