Crush Report Revised; Look for Light Volume Ahead of Report Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 28, 2008
A lower to sharply lower start is likely this am following overnight losses across the floor. Wheat could start 15 down with corn off 3-6 and beans down 20. Remember, new daily price limits start today: 70 cents in beans, 30 cents in corn and 250 points in oil.

Dalian, China grain futures were lower with the exception of corn, which was mixed. This will weigh on our bean, meal and oil markets. Malaysian palm oil fell 90 ringgit and crude oil is lower this am, a negative combination for our bean oil market.

The Census Bureau revised its February crush report from yesterday, when they reported oil stocks at a surprisingly low 2.681 billion lbs vs trade ideas of 2.971 billion. This morning they put oil stocks at 3.101 billion, a whopping 480 million lb increase from yesterday's estimate! This is bearish for oil this am, of course. The USDA announced this am that 397,000 tonnes of US corn was sold to an unknown destination, 287,000 tonnes for this crop year and 110,000 tonnes for next crop year. This should temper opening losses in corn this am.

The southwest winter wheat belt is forecast to remain mostly dry until Sunday-Monday, when up to 75" is forecast for the eastern half of the belt but just a trace to .25" is expected in the dry western half of the region. The 6-10 doesn't offer much relief for the west with below normal rain forecast there but above normal rain expected in the east. The western corn belt will see up to .75" of moisture Sun-Mon, favoring the southern and eastern parts of this area. The eastern corn belt will see .25-1" of rain Sunday with .5-1.5" more forecast Mon-Tue. This rain will not be welcome as it will further delay early corn planting in southern areas of the belt. The 6-10 calls for above normal rain, which will be bullish corn if this is correct as this will delay early corn planting even more.

For what it's worth (and it ain't much): remember a couple years ago or so when Goldman Sachs forecast $100 a barrel oil and no one believed them? Now they are predicting corn acreage in Monday's acreage report will be just 84.1 million acres vs the trade average of 87.4 million. I know that just because they were right about crude oil doesn't mean they will be right about corn but as a corn bull I sure hope they are right again! Expect a lot of evening up and positioning today ahead of the USDA reports Monday am. Volume could be light again today as was the case yesterday.   ¶ 8:41 AM   0 Comments

  Farmer "Strike" in Argentina Could Support US Grains Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 26, 2008

Another higher to sharply higher start is likely this am, 10-15 wheat, 7-10 corn and 40-50 beans. Crude oil and gold are higher, the $ is lower, Malaysian palm oil jumped 200 ringgit and Dalian, China grain futures are higher (except corn, which is mixed). All of the above should lend early support to our grain opening.

Additional support could come from the worsening situation in Argentina, where a farmers "strike" that began on March 13 shows no signs of ending. Protests have taken place in Buenos Aires as food supplies dwindle at grocery stores. Farmers continue blocking roads to Rosario, the main export port and more exporters have been forced to declare force majeure, meaning they cannot fulfill their contract obligations due to forces beyond their control, which allows them to switch Argentine bean, meal and oil exports to US or Brazilian origin. There are reports that up to 1 million tonnes of Argentine beans sold to China have been delayed due to the strike and if it continues much longer, more cargoes will have to be switched to non-Argentine origins. This is bullish for US bean and product exports, of course.

Weather is fast becoming more important as a market influence and it is a bullish one. Only light, scattered rain is forecast in the western corn belt the next couple of days and again over the weekend. However, the eastern corn belt, which has had severe flooding and field work delays in the south, is expecting rain today through Friday, up to 2". More of the same is forecast Sun-Mon and the 6-10 day calls for above normal rain. This will further delay early corn planting in the south, which is bullish corn but potentially bearish beans since it could result in less corn and more bean acreage than would otherwise be the case. The opposite problem continues in the southwest winter wheat belt where very dry conditions in the western half of the belt are likely to worsen with dry weather extending through Friday. The 6-10 day calls for below normal rain in the western half of the belt. The eastern half of the belt is in much better shape with scattered rain forecast this weekend and the 6-10 day calling for above normal moisture.   ¶ 8:37 AM   0 Comments

  Weather Factors Building in Importance Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 25, 2008

A higher to sharply higher start is likely again this am, up around 20-30 wheat, 7-10 corn and 40-50 beans. All the indicators point higher this am: crude oil and gold are higher, the $ is lower, Dalian, China futures were all higher except corn and Malaysian palm oil was 160 ringgit higher.

Weather remains supportive with dry conditions continuing in the dry western areas of the southwest winter wheat belt the rest of this week. Some beneficial rain is forecast in northern and eastern parts of the belt the second half of the week but the dry areas are not likely to get any moisture and the 6-10 day calls for below normal rain, increasing the need for rain soon in the dry areas. The southern corn belt has just the opposite problem with too much rain falling recently and more of the same forecast. Tomorrow and Thursday up to 1.5" is forecast in southern parts of the belt and the 6-10 day calls for above normal moisture. All this precipitation could delay early corn planting in the southern part of the corn belt, which is bullish for corn. If farmers can't plant corn in a timely manner, they might switch acreage intended for corn to beans, which would be bearish for beans.   ¶ 8:15 AM   0 Comments

  Grains Likely to Open the Week Higher Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 24, 2008
A higher start is likely this am, up roughly 15-20 in wheat, 5-10 in corn and 20 in beans following overnight gains. Crude oil and gold are lower while the $ is higher this am, a bearish combination for all the grains. Thursday, the CRB index, based on 19 commodities, had its largest one day fall ever, down 8.4% as many funds liquidated long commodities/short $ positions. Grains were included in this sweeping commodities sell off, falling limit down in most pits the last two days of last week. Many traders think the grains are now oversold and due for a technical correction, which appears to have started overnight.

The USDA was open Friday while the futures markets were closed and the USDA announced Friday that China bought 113,000 tonnes of US beans. Dalian, China grain futures were mostly higher today with big gains registered in most pits, especially bean and palm oil. Malaysian palm oil gained 10 ringgit today by the close after being much higher earlier in the session. Wednesday Turkey will be in the market for 250,000 tonnes of optional origin wheat. Supposedly, 5-6 cargoes of Argentine origin beans and 3 cargoes of Argentine origin meal have been switched to US origin due to the ongoing farmers strike in Argentina which has shut off farmer selling and effectively closed Argentina's main export port, Rosario, Some exporters have declared force majeure on Argentine shipments, allowing them to switch the origin. Force majeure means due to events or forces beyond anyone's control the contract can not be fulfilled and has to be changed, in this case by switching origins.

Starting with the Thursday night session, margins for corn, beans and oil will increase due to the increased daily trading limit for these three markets. India is considering lowering its import tax on bean oil. Last week they cut their import tax on palm oil. India's Farm Minister said India will not import any wheat this year as they have a good harvest coming up. Favorable South American weather continues as harvest moves forward in both Argentina and Brazil. Rain is needed in parts of Australia's wheat belt but not in the forecast, a situation that bears watching. Scattered rain/snow fell in the US corn belt over the weekend and more of the same is likely Thur-Fri, with only light precipitation expected, if any, between now and then. The 6-10 day outlook calls for above normal rain. This will raise concern about corn planting delays in the southern corn belt. The southwest winter wheat belt was generally dry over the weekend and only light, scattered rain is forecast this week. The 6-10 day calls for mostly below normal rain.   ¶ 8:53 AM   0 Comments

  Grains May Continue to Slide Today Vic Lepsinasse's Pre-Opening Commentary from the Floor of the Chicago Board of Trade for March 20, 2008

A sharply lower start is expected this am, roughly 35 down in wheat, 20 lower corn and 50 off in beans. The big picture: Many large traders, such as hedge funds, have been long commodities, short the $ for a long time and making money. This formula for sucess seems to have abruptly changed, perhaps due to recent Fed actions or maybe this is just a massive correction. Either way, the $ continues very strong this am while commodities continue to sink with crude oil, gold and grains all posting large overnight losses. There is a lot of talk in the press about all this, including today's Wall Street Journal, for example.

Now back to the grains: Egypt is in the market for optional origin wheat with results due before our opening and depending on what Egypt does the wheat market could be affected. Remember, Chicago, KC and Minneapolis wheat all have a $1.35 limit today.

Argentina's Agriculture Secretary raised his corn production guess 500,000 tonnes to 20.5 million tonnes and upped his bean guess to 47 million tonnes, also up 500,000 tonnes. The USDA currently puts Argentine corn production at 47 million and beans at 21.5 million. Argentine farmers remain on strike over higher bean export taxes, not selling any beans into the market. They claim they will remain on strike at least until next week. This has not been a market factor so far but it could become one if the strike lasts beyond next week and it would be friendly for bean prices. There is talk a Chinese bean importer defaulted on 1 cargo of US beans and there supposedly have been defaults now on 1-2 cargoes of Argentine oil as prices collapse. This could feed fears of more defaults, which would be bearish for prices. An Indian official said they will cut import taxes on edible oil, including bean oil, but didn't give any time frame. This would be supportive for oil.

Weekly export sales were slow for wheat, 168,000 tonnes between old and new crop years. The rest were all good: 781,000 tonnes of corn between the old and new crop years; 504,000 tonnes of beans between the old and new crop years; 176,000 tonnes of meal and 24,000 tonnes of oil. Rain/snow is forecast for the eastern corn belt the next couple of days with moderate rain in the western half of the belt. The 6-10 day calls for above normal moisture in the belt. All this moisture could delay early corn planting, or so they say, but in reality it is still too early to be much of a concern. The southwest winter wheat belt will see rain in parts of Oklahoma and Texas over the weekend but generally dry weather will be seen in most of the belt. The 6-10 day calls for below normal rain.

Keep April 22 on your calender. The CFTC (Commodity Futures Trade Commission) will hold a meeting to discuss the lack of convergence between the cash and futures markets, higher margins and the role of speculators and index funds in the markets. This could result in some policy changes that impact the market significantly. The cash and futures markets usually converge or come together as we get closer to the expiration of the futures contract. For example, the cash market and May futures should be about the same just before May futures expire. Lately, this hasn't always happened the way it should and the CFTC wants to know why since this is a main function of the market.   ¶ 9:03 AM   0 Comments

  Outside Markets Weigh on Grains Today Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 19, 2008

A lower start is likely across the floor, down roughly 5-7 wheat, 10-12 corn and 15-20 beans. Malaysian palm oil fell 120 ringgit and Dalian, China palm and bean oil futures were sharply lower again. Dalian bean, meal and corn futures were mixed. Crude oil and gold are sharply lower while the $ is slightly better. Equities are lower this am. These outside markets were very supportive for the grains yesterday but this am they are likely to exert a bearish influence on the grains. The Fed cut its key interest rate 3/4 of a point yesterday after the grains were closed. This was less than the full point cut many expected and it is a negative influence for the grains this am. If the Fed had cut a full point or more this would have been inflationary and bearish the $, a bullish combination for commodities markets, including grains. The fact the Fed didn't cut as much as expected is weighing on commodities markets such as gold and crude oil this am and it weighed on grain prices overnight as well.

Egypt is in for optional origin wheat this am with results expected before the opening. If they buy a large amount of US wheat this will support wheat today but if they don't buy any or much US wheat it will be a negative for wheat prices today. Japan did buy 50,000 tonnes of US wheat at their weekly tender. Iraq apparently bought at least 150,000 tonnes of US hard red winter wheat, the type traded in KC, over the last two days. The Ukraine's Agriculture Minister is predicting a wheat crop this year of 19.1 million tonnes vs just 13.9 million last year.

Widespread flooding in the southern corn belt will delay the start of early corn planting. Missouri had 2-5" of rain the last 24 hours while southern Illinois, southern Indiana and Ohio had 3/4-2.5" during this same time. Light rain or snow is expected the next several days in the Midwest while the 6-10 day forecast calls for above normal rain over much of the belt. If correct, further delays are likely for early corn planting. Rain fell in the eastern half of the southwest winter wheat belt the last 24 hours, between .5-1.5". Mostly dry weather continues in the western half of the belt, where rain is most needed. The rest of this week will be on the dry side across the region but light weekend rain is forecast.   ¶ 8:30 AM   0 Comments

  Lower Grains Start Possible Ahead of Fed Meeting After Close Today Vic Lespinasse's Pre-Opening Grains Commentary from the Floor of the Chicago Board of Trade for March 18, 2008

A mostly lower start is likely this am, down 35-40 beans, 3-5 corn, $3-4 meal and 150-175 oil. Wheat is called 10-12 higher. Crude oil is sharply higher this am after suffering a huge drop yesterday. The $ is a little lower today. Malaysian palm oil fell 150 ringgit today and Dalian, China grain futures are sharply lower to limit down. China usually regards its grain stocks as a state secret but Premier Wen Jiabao revealed today that China has grain stocks of between 150-200 million tonnes. This is much larger than the USDA guess of 106 million tonnes and is negative for grain prices. The bulk of China's grain stocks is thought to be in wheat and rice.

The Federal Reserve Board meets today and they are widely expected to cut interest rates either 3/4 or 1%. This won't affect grains today since the announcement won't be made until 1:15 pm, central time, when the grains close.

There is some growing concern that Chinese buyers might default on recent purchases of very high priced bean and palm oil now that prices have dropped so sharply the last couple of weeks. If they do default, this would of course be bearish for bean oil prices. Jordan bought 100,000 tonnes of wheat, likely to originate from the Black Sea region.

The southwest winter wheat belt benefited from rain of up to 1.5" over the last 24 hours although the driest part of the region, southwest Kansas and the panhandles of TX and OK had very little rain. More rain is forecast in the southwest over the next 7-10 days but the driest areas are only expected to get modest amounts while the wetter areas in the eastern half of the belt get the most. Rain or snow fell in the Midwest yesterday and more is forecast the next couple of days. The 6-10 day calls for above normal rain in much of the Midwest, which will provide moisture for spring planting.   ¶ 9:06 AM   0 Comments

  February Crush Below Expectations; Mixed Open in Grains Projected Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 14, 2008
A mixed but mostly higher start is likely this am, up 3-4 corn, 5-10 beans and $2 meal but down 5-10 wheat and 10 points in oil. The NOPA (National Oilseed Processors Association) February crush was a little lower than expected, 138.9 million bushels. Oil stocks were 2.717 billion lbs vs one survey average of 2.797 billion while a different survey averaged 2.693. On balance, I would say the oil stocks figure was about as expected, given the slightly lower than expected crush. Informa will estimate acreage at 10:30 central time this am. Remember, March futures expire at noon today, central time.

Malaysian palm oil fell sharply today, down 112 ringgit. Crude oil is lower this am and the $ is a little higher. All this is negative for our bean oil market. India's wheat areas will be warm and dry the next 5-7 days while China's wheat belt will have mostly dry weather the next 5-7 days also. Australia's central and southeastern wheat belts will have hot and dry conditions at least the next 5 days. The US western corn belt will see scattered rain the first half of next week while the eastern corn belt will see scattered rain the next couple of days in southern and eastern areas. Light rain is likely again the first half of next week in the eastern half of the Midwest. The 6-10 day calls for wet weather in the south and east parts of the Midwest, below normal rain in the northwest part of the corn belt. The southwest winter wheat belt will see scattered rain in the east today with more Mon-Tue, up to 1.5". Western parts of the belt will get up to .5" early next week. The 6-10 day calls for wet weather in the east, below normal rain in the west. All the weather forecasts are from Meteorlogix Weather.   ¶ 8:30 AM   0 Comments

  Tentative Bullish Perspective on Grains Following Overnight Gains Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 6, 2008

A higher to sharply higher start is likely this am following big overnight gains. The early call is roughly 25-30 up in wheat, 3-5 better corn and 10 higher beans. Crude oil is trading on either side of unchanged but the $ continues lower, which could lend some background support to all the grains.

Japan bought 71,000 tonnes of US wheat at their weekly tender. Malaysian palm oil fell 92 ringgit today. Conab, the Brazilian government's version of our USDA, upped its Brazilian bean estimate from 58.5 million tonnes in February to 59.6 million. They hiked their corn guess from 55.3 million tonnes last month to 58.5 million. ADM put out almost all the 400 wheat deliveries this am while Bunge stopped 230. The Indian wheat crop has been under some stress lately from hot weather, which is forecast to continue. Pakistani traders are saying their wheat crop will fall short of government production targets, possibly forcing them to import up to 2 million tonnes of wheat this year. Weekly export sales were slow for wheat, a total of 505,000 tonnes between the old and new crop years; corn was also slow, a total of 710,000 tonnes between the two crop years; bean sales were also on the light side, 203,000 tonnes; meal sales were good, 76,000 tonnes and oil sales were in line, 6800 tonnes.

Informa is expected to put out their acreage estimates late next week ahead of the huge USDA planting intentions report March 31. Yesterday Informa said their wheat survey showed the crop in much worse shape than last year, which comes as no surprise. The USDA attaché in Beijing, China estimated Chinese corn production for 2007-08 at just 137 million tonnes vs the official current USDA guess of 145 million. Poor weather was blamed for the lower crop. South American weather hasn't been much of a market factor for some time. Generally favorable weather is forecast to continue in most areas of both Brazil and Argentina with light, scattered showers interspersed with dry periods over the next week or so. While we should start higher in all pits today some traders will likely be tentative on the bull side of the market after yesterday's sudden and unexpected break in several pits.   ¶ 9:19 AM   0 Comments

  News From China Could Be Bullish for Grains Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 5, 2008
It's an all-China news morning today as they start their annual parliament meeting. Premier Wen, the National Development and Supply Commission head and the chairman of COFCO, the huge government owned grain processor, importer and exporter all spoke and their overriding theme was controlling inflation, especially regarding food, food security, grain production, etc. Among their pronouncements, they said China will strictly control grain exports, the largest of which is corn. The chairman of COFCO went further, saying China would halt grain exports this year, meaning mostly corn, except small amounts to a few countries such as Taiwan. Premier Wen said China will increase imports of products that are in short supply, taken to mean more grain imports. These officials also said China will control, if not halt, the expansion of corn used to make ethanol, helping prop up supplies of corn for food. China is not going to build any more ethanol plants for the time being. The premier emphasized the need for increased grain, oils and meat production. All of this sounds bullish to me but Dalian futures prices were sharply lower to limit down today for the second day in a row. There has not been any release of government bean or palm oil stocks, despite talk that this was about to happen.

Malaysian palm oil was sharply lower again early in their trading day but by the close May palm oil ended just 4 ringgit lower, coming back about 170 ringgit from its early lows. Crude oil is higher but our bean oil market ended about 25 points lower. The rest of our grains finished higher overnight and that is the early call this am: up 20 in wheat, 5-7 in corn, 15-20 beans and $3 in meal. Maybe I am reading too much into all the China news but to me it seems very bullish with China putting all this emphasis on increasing grain production, controlling or outright halting grain exports and increasing grain imports.

In other news, Jordan is in the market for 100,000 tonnes of optional origin wheat on March 18 and Iraq is in March 15 for 50,000 tonnes of optional origin wheat. Usually, they buy much more than they tender for. I forgot to mention above that while bean oil futures in Dalian were limit down, the cash bean oil market was higher as supplies tighten further in the absence of the release of government oil stocks. Furthermore, China extended until September 1 the low import tariff on bean oil that was already extended once before. Bunge stopped 146 of the 200 wheat put out on delivery this am while Dreyfus put out 1400 of the 1700 beans on delivery today.

Program Note from Dagny Kight---
Look for Vic in today's Chicago Tribune! If you're not here in the Windy City with us, you can find the article at the Trib's website: Tribune article on higher grain prices.

Links to Vic's interviews and television appearances can now be found on the Media Links page on our website. Click here to browse the articles and see video!   ¶ 9:21 AM   0 Comments

  Turn Around Tuesday Like to Take the Grains Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 4, 2008

China's Dalian futures market has been sharply higher to limit up the last several days in beans and oil but today these pits were mixed amid widespread talk the Chinese government might intervene to halt the inflationary rally in grain and veg oil (bean and palm) prices. This sparked a massive wave of long liquidation around the world. For example, Malaysian palm oil, which had been higher again early in its trading day, sold off sharply to end 231 ringgit lower. Our May oil contract was almost limit up early last night but it sold off sharply, almost touching limit down, before ending about 115 points lower for the night. Similar very wide swings were seen in beans before they ended lower. The early call this am is down about 10 cents in beans, off 3-5 in corn but up about 12 in wheat, which isn't directly linked to gyrations in Dalian. Taiwan bought 75,000 tonnes of US wheat today, providing mild support. While corn, beans and oil have been skyrocketing lately, wheat has not and this disconnect remains in place this am. Crude oil is a little higher this am but not enough to impact our markets very much. There was one salient feature in the deliveries this am as far as commercials were concerned: ADM put out 769 oil. There were no large commercial stoppers in any of the grains. Argentina will see generally dry weather in the north the next several days while up to 1" of beneficial rain is forecast in the south the next few days. Southern Brazil will be mostly dry the rest of the week while northern Brazil will see unwanted scattered rain the next few days. It's Tuesday and it appears the "turn-a-round Tuesday" syndrome will be active, meaning the markets will reverse course from yesterday, when they were higher, and trade lower today.   ¶ 9:25 AM   0 Comments

  Sharply Higher Start in Grains May Hold All Day Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for March 3, 2008
A sharply higher start is expected this am, roughly 40 up in wheat, 10 in corn and 30 in beans. Dalian, China futures prices were sharply higher again today, especially beans and oil. China's Commerce Minister added further fuel to the fire, saying today that China might increase imports of major agricultural products to meet rising demand and tame inflation. Crude oil and gold are higher this am while the $ is lower, a bullish combination for all the grains. Malaysian palm oil jumped to another new all time high, up 325 ringgit. This is the biggest one day rise I have ever seen in this market.

Taiwan tenders tomorrow for 75,000 tonnes of US wheat. An Indian trade group said Indian rapeseed production is likely to be cut 15% this year due to adverse weather. Deliveries were 162 lots in wheat, 1500 corn, 358 beans, 567 meal and 740 oil. ADM stopped 250 oil, the only sizable commercial stopper. Argentina had scattered rain in northern growing areas over the weekend with more possible today followed by mostly dry weather Tue-Sat. Southern areas had .3-1.5" over the weekend with more expected today and mostly dry weather forecast tomorrow-Saturday. All the weekend rain was welcome. Southern Brazil saw welcome weekend rains of .5-1.5" with more forecast the next 3 days. The second half of the week is forecast to be mostly dry. Northern Brazil had unwanted rains over the weekend of .3-1.5". Egypt bought 125,000 tonnes of Russian wheat over the weekend but 25,000 tonnes of this could be switched to US origin. We will start - and probably end - sharply higher in all pits.   ¶ 9:23 AM   0 Comments