Early Call On Chicago

03/05/12 -- The overnight gains saw a bit of consolidation for wheat which closed with modest 3-5 cent gains, corn and beans were mixed. Crude is slightly easier and the dollar a tad stronger.

The USDA's weekly export sales report came in at 1,331,900 MT on old crop corn and 2,140,300 MT for new crop, in line with expectations for a combined 3-4 MMT. Much of this was previously reported business under the daily reporting system with China taking 214,000 MT of the old crop and 172,500 MT of the new crop. We also have a large 509,500 MT of the old crop going to "unknown" along with 1,920,000 MT of the new crop to the same.

For soybeans we had sales of 598,000 MT of old crop and 1,134,000 MT of new crop beating expectations for combined sales of 0.9-1.4 MMT. China accounted for 117,300 MT of the old crop and 675,000 MT of the new crop. Unknown took 147,500 MT and 394,000 MT respectively.

Wheat sales were 256,700 MT old crop and 454,800 MT new crop against expectations for combined sales of 600-850 TMT.

The corn sales, whilst huge, were already in the market. It will be interesting to see the market reaction to this today, as the trade did a pretty good job of selling the fact last week. Soybean sales beat expectations, with another significant slug of old crop included to further tighten the balance sheet.

Bang on cue, the USDA have today reported 232,000 MT of new crop soybean sales to China today under the daily reporting system.

If I was going to be long one of the big three then it would still be soybeans for me. China are going to buy what, 58 MMT of them this year? That makes their corn import requirements look pretty insignificant doesn't it? Rival soybean harvests are a very long way off, but competing wheat harvesting is not very far away at all with corn somewhere in between. We will also be seeing potentially record US corn production in 2012 along with significant increased plantings in Ukraine and other pasrt of Eastern Europe.

The UN's Food and Agriculture Organisation say that world wheat production in the coming season will come in at 675 MMT, 3.6% down on last year. World soybean production for 2011/2 will fall 9.5% to 240 MMT, one of the steepest year on year declines on record, they add.

Early calls for this afternoon's CBOT session: corn up 2-4 cents, wheat up 3-5 cents, soybeans down 2-3 cents.