Steady Start in Grains Projected Following Modest Overnight Moves

A steady/slightly higher start is the tentative call this am, steady wheat, 1-2 better corn and 5 up in beans, following overnight moves. The outside markets are mixed with the slightly lower $ supportive but the slightly lower crude oil market and the lower equity markets are negative for grain prices. There isn't a lot of fresh market-moving news again this am, which could result in another day of light volume, making it easier to push the market either way.

Concern continues to build over hot and dry weather in most of Argentina's wheat, corn and bean areas with more of the same forecast the next week or longer. The only rain in the picture is for early next week in the south, when scattered, light rain is forecast. Beneficial rain is forecast to be scattered over northern Brazil today through Friday and southern Brazil will see very light, isolated rain Thur-Fri with dry weather following for several days. The 6-10 day calls for warmer temps and below normal rain, a situation that needs to be watched as it could turn into a bullish situation if southern Brazil follows Argentina's pattern. Wet weather in parts of Australia's wheat belt will slow harvesting there this week.

The US southwest winter wheat belt will remain dry today through Saturday although there is some light, isolated rain forecast in the west Thur-Fri and in the east Sunday. The midwest will be mostly dry today and tomorrow in the west with some very light precipitation forecast Fri-Sun while the east will stay dry until light precipitation arrives Sun-Mon. Overall, the forecast calls for good corn harvesting weather in the midwest this week into next with the 6-10 calling for below normal precipitation. Keep an eye on the outside markets for direction in the grains again today.---Vic Lespinasse

Overnight Losses, Lack of Fresh News Indicate Possible Lower Open

A lower start is indicated this am by overnight losses. Crude oil is slightly lower currently, as are the equity markets while the $ is a little lower also, none of which is enough to influence the grains strongly if they maintain these levels when the grains open. The outside markets need to move in an extreme manner to shape the course of the grain market so traders will continue watching them as the day wears on but for now they are not a factor as far as the grains are concerned. The early call is down 5 in wheat, 3-5 lower in corn and 10 off in beans, all based mainly on overnight losses. Dalian, China grain futures were mixed today. There isn't a lot of fresh news to drive prices strongly in either direction today.

Winter wheat's good to excellent rating fell to 66% from 68% last week, still in very good shape overall. Corn harvesting was slower than expected, 78% vs 94% average but beans were about as expected, 95% in the bin vs 96% average. Winter wheat planting reached 96%, the same as the 5 year average.

Pakistan will be in the market this week for 500,000 tonnes of white wheat, according to a Food Ministry official. Argentine wheat harvesting is about 10% done now. Concerns continue to grow over the hot and dry weather pattern in most of Argentina's main growing areas. The forecast this am is unchanged from recent days with hot and dry weather forecast the rest of this week while the 6-10 day calls for more of the same. This is stressing late developing wheat as well as newly planted corn and beans and could delay further planting of these crops. The situation is much better in Brazil with scattered, welcome rain in northern growing areas today through Thursday. The south will see dry weather, allowing for rapid planting progress, the next two days, interrupted by rain on Thursday in Parana, the second largest Brazilian bean producing state, before dry weather returns Friday-Sunday. If this mostly dry pattern continues in southern growing areas, it could become a cause for concern but for now conditions remain favorable. Wheat harvest delays are expected in parts of Australia from rain this week.

The US southwest winter wheat belt will stay dry today through Friday with a few light showers in the east over the weekend. The 6-10 calls for below normal rain as the crop moves toward winter dormancy. Weather now is of much less importance than it will be next spring, when the crop comes out of dormancy and the need for moisture is much greater. The midwest will see dry weather the rest of this week, allowing for rapid corn and bean harvesting. Precipitation is likely over the weekend in the west and early next week in the east. The 6-10 calls for below normal precipitation, which should allow late corn harvesting to just about finish, at last.---Vic Lespinasse

Little Fresh News Projects Slightly Lower Grains Start

A slightly lower start is likely this am following small overnight losses in most pits. There isn't a lot of fresh news to drive prices sharply in either direction this am. The outside markets are mixd this am with the $ down while crude oil and the equity markets are slightly lower. Dalian, China grain futures were mixed today.

Informa estimated 2009 corn acreage at 86.8 million acres, up 900,000 acres vs 2008. Their bean guess was 77.2 million, up 1.35 million vs 2008 and their all wheat number was 60.1 million acres, which would be down 2.96 million vs 2008.

Weekly harvest progress for corn this afternoon in the weekly harvest progress report is likely to be over 80% complete with beans virtually done. Corn export sales Friday afternoon were a record low for the 10th week of the corn marketing year and bean sales for the 10th week were at a 10 year low.

Rain in some Australian wheat areas will slow harvesting this week. Argentina saw isolated weekend rains but this week will be mostly hot and dry for all the major grain areas, increasing stress on wheat as well as newly planted corn and beans. Brazil is in better shape with beneficial rain expected in the north this week while the south is mostly dry, allowing planting to speed up after being delayed by too much rain recently.

The US southwest winter wheat belt remains in very good shape overall following a mostly dry weekend with more of the same forecast this week until Fri-Sat, when rain is forecast, mostly in the eastern half of the belt. The midwest saw scattered weekend precipitation, centered in the east, where up to 1.5" of moisture was seen. The west will be mostly dry today through Thursday with scattered precipitation Fri-Sat. The east will be dry until Fri-Sat, when precipitation will move into the region. This should allow for bean harvesting to finish up while late corn harvesting makes good progress. Keep an eye on the outside markets again today for direction in the grains.---Vic Lespinasse

Bearish Factors and Export Figures Indicate Defensive Grain Opening

A mixed start is indicated by overnight trading but I suspect we will start mostly lower this am due to the outside market trends this am: higher in the $, lower equity and crude oil markets. This is a bearish combination for the grains, of course.

Weeky export sales this am were mostly poor, another reason to expect a defensive start: just 248,000 tonnes of wheat, 355,000 tonnes of corn and 478,000 tonnes of beans. Traders expected 225-375 wheat, 375-650 corn and 525-775 beans. Meal sales were good,124,000 tonnes vs ideas of 75-125, while oil sales were in line with trade ideas, 6400 tonnes. The National Oilseed Processors Association Oct crush was 143.4 million bushels vs ideas of 142.5 million. Despite this somewhat higher than expected crushing rate, oil stocks were just 1.984 billion lbs vs ideas of 2.022 billion.

China officially announced they are ending their 5% export tax for corn starting Dec 1 but this won't be enough to allow corn exports as Chinese prices are still too high vs other origins, such as the US.

Nov beans expire at noon US Central time. Starting today, March wheat is the top month and will be the most active, liquid month. Starting Monday, March corn will replace Dec as the top month in that pit.

OPEC has scheduled another meeting Nov 29 in Cairo and many analysts expect another production cut. Bean deliveries this am totaled 275 lots to Nov 13. Dreyfus stopped 52 lots. Informa is expected to put out early acreage guesses this afternoon with some expecting them to estimate more corn and less bean acres. Mississippi River barge tariffs have fallen over 50% in the last week as farmer selling remains slow.

Northern Brazil will continue to benefit from favorable rain while dry weather in the far southern state of Rio Grande will allow planting to progress. Hot weather will increase the need for moisture in Argentine corn and bean areas but only dry weather is forecast in the north today through Wednesday while the south will see light rain today and tomorrow before dry weather returns Sun-Wed.

The southwest US winter wheat belt will be dry today through Wednesday with the 6-10 calling for below normal rain also. Conditions remain in very good shape there overall. The midwest saw light, scattered rain the last 24 hours. Only light, scattered precipitation is likely today and Sunday with dry weather at least the first half of next week. The east will see up to .75" scattered rain today and tomorrow. Snow is possible early next week. The 6-10 day calls for below normal rain, which should allow corn harvesting to make good progress at long last.---Vic Lespinasse

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Lower Start Indicated as Grains Continue Slide Down

A lower start is likely this am, around 6-8 off in wheat, 1-2 down in corn and 10 in beans. The outside markets indicate a lower start with the $ a little higher while crude oil and the equity markets are a little lower. If these markets change direction, the grains will probably follow but for now they are a negative influence for the grains.

424 beans were put out on delivery this am with Dreyfus stopping only 19. The date was Nov 11. Corn hit a one year low yesterday as grain prices continue sliding lower.

Indonesia announced they will return to the rice export market for the first time in 16 years as Asian supplies have gone from tight to ample since early this year. China announced they are dropping their export tax on grain. They are harvesting a record large corn crop and have plenty available for export. Very cheap ocean freight rates, however, make US corn exports cheaper for Asian customers than Chinese corn exports. Last week South Korea bought US corn at $209 a tonne while Chinese corn was offered at $234 a tonne. As long as freight rates are so cheap, Chinese corn exports, if any, will be very slow. The China National Grain and Oils Information Center, a government linked think tank, cut their estimate of China's bean crop 1 million tonnes to 16.5 million due to drought in the largest Chinese bean producing province in August, Heilongjiang. The USDA estimate is 16.8 million.

Rain will fall in northern Brazil bean fields the next few days, where it is welcome. Argentine wheat, corn and bean fields were mostly dry the last 24 hours and more of the same is likely the rest of the week and into early next with only light, isolated showers in the south Friday and in the north Saturday. More rain is needed across all Argentine grain areas soon.

The US southwest winter wheat belt will be generally dry the next several days and the 6-10 calls for more of the same. Conditions remain very favorable for the crop. The midwest will see some further harvest delays with light precipitation in the east the next few days following light precipitation in both the east and west the last 24 hours. Mostly dry weather is forecast in the west the next several days and the 6-10 day calls for below normal precipitation, which should allow long delayed corn harvesting to speed up. ---Vic Lespinasse

Outside Markets Pointing Lower; Lower Start Expected in Grains

A lower start is expected in all pits this am, roughly 5 cents in wheat and corn with beans off around 20-25, following the overnight pattern. The outside markets point lower this am with crude oil and the equity markets lower. The $ index is steady currently so it isn't a factor as far as the grains are concerned. Traders will continue to watch these outside markets again today as they will influence the grain markets direction, as was so strongly the case yesterday.

Bean deliveries totaled 70 lots this am with Dreyfus stopping 28 lots. The date was Nov 7.

Weekly harvest progress was reported at 71% for corn yesterday afternoon vs 88% average. Beans were 93% done, the same as the average for this time of year. Winter wheat is rated 68% good to excellent, up 1% from last week.

Today is Veterans Day and some markets, such as the Treasuries, are closed so it will probably be slower than usual.

Rain in northern Brazil the next few days will be welcome while drier weather in the south will help wet fields dry out so planting can pick up. Argentine grain areas were mostly dry yesterday and more of the same is forecast today through Friday before light, scattered rain is seen over the weekend. Much more rain is needed soon in all Argentine grain areas or newly-planted corn and beans will be under stress while additional corn and bean planting will go into dry soil or be delayed. About 1/4 of the beans and 2/3 of the corn crops have been planted so far. Harvest is underway in northern Australian wheat fields so rain is not welcome there anymore.

The US southwest winter wheat belt saw up to .75" of scattered rain the last 24 hours but dry weather is forecast the rest of this week. Overnight rain was seen in the midwest. Scattered precipitation will be seen today through Thursday in parts of the belt, slowing late corn harvesting. Snow might be seen late in the week rather than rain. The 6-10 day calls for drier than normal conditions, which will be welcome as farmers try to speed up corn harvesting and finish up bean harvesting.---Vic Lespinasse

USDA Crop Report Overshadowed by News from China

Once again, economic news trumps fundamental news in the grains: The USDA crop report was overshadowed this am by news China is implementing a $586 billion stimulus package. This sent crude oil, grain and equity prices sharply higher this am. Couple this with the lower $ this am and we have the makings of a strong start in the grains. The early call is roughly 10 up in wheat and corn with beans around 20 higher.

The USDA Nov crop report was neutral overall for wheat, corn and beans. The US corn crop was put at 12.020 billion bushels with beans 2.921 billion, both a shade lower than expected. The carryover was 1.124 billion bushels for corn, 205 million for beans and 603 million for wheat. The corn number was about 50 million bushels below trade ideas but beans and wheat were about 15 million higher than expected, a shade negative for these markets. World carryover numbers were up about 1 million tonnes in wheat to 145.25 million tonnes, up 4.5 million tonnes in corn to 110.1 million but down 300,000 tonnes in beans. The corn carryover number is negative for this market. The USDA left its estimate of 4 billion bushels of US corn used to make ethanol unchanged from last month although many traders think the actual amount will be several hundred million bshels less. The USDA left its guess of 3.1 billion lbs of US bean oil used to make bio diesel fuel unchanged from last month also. In world production numbers, the USDA cut its Argentine corn crop guess 1 million tonnes to 18 million and its Argentine wheat crop guess to 11 million tonnes from 12 million before. These cuts were due to adverse weather in Argentina this season. They cut the Australian wheat guess 1.5 million tonnes to 20 million due to dry weather also, bringing them in line with most trade estimates. They cut Brazilian bean production 2.5 million tonnes to 60 million but left Argentine beans unchanged at 50.5 million. The EU wheat crop was increased to 150.6 million tonnes from 147.2 last month.

Bean deliveries were 575 lots to Nov 6 with Dreyfus stopping 252 lots.

Wet conditions are expected to prevail in the north with drier weather in the south the next few days in Brazil. The wet weather in the north will be welcome as it has been on the dry side there this season while drier weather is welcome in the south, where it has been too wet. Weekend rain in parts of Australia's wheat belt, New South Wales and Queensland, will help late developing crops there. Up to 1" scattered rain fell over the weekend in Argentine growing areas. More light rain is forecast today with mostly dry weather following for a few days. This rain will be welcome as it has been too dry in most of the growing areas so far this season.

The southwest US winter wheat belt will see up to .6" scattered precipitation today through Tuesday with mostly dry weather the rest of the week. The 6-10 day calls for below normal rain. This crop should remain in good shape overall. The midwest had light, scattered precipitation over the weekend. Dry weather is likely today, followed by scattered precipitation Tue-Wed in the west and Tue-Thur in the east with snow possible by Thursday in the west and Friday in the east. This moisture wll keep harvest progress slow, not a big deal for beans but a problem for corn, which remains way behind normal. The 6-10 calls for drier weather, which will be welcome. Watch the outside markets again today for overall direction in the grains.---Vic Lespinasse

Today's Main Event: Monday's USDA Crop Report

A slightly higher start is likely this am but not as much as overnight. The outside markets are not as supportive to the grains now as they were before the monthly employment report came out and this could take away some of the expected strength in the grains. The $ is still lower, which is friendly for the grains but the equity and energy markets have turned slightly lower, which will take away support from the grains. Of course, these outside markets have been a major influence on the grains lately but mostly when they move in an extreme manner, something they are not doing so far this am. Traders will keep an eye on them for direction in the grains but unless they move sharply in either direction, their influence will be minor.

The main event today figures to be positioning and evening up ahead of Monday's USDA crop report, out at 7:30am US Central time. Look for a 3-4 cent higher start this am in wheat and corn with beans up 5-7, depending on what the outside markets are doing shortly before the grains open.

ABIOVE, the Brazilian Vegetable Oil Industry Association, estimated the bean crop at 61.4 million tonnes, 1.5 to 2.5 million tonnes higher than Brazilian government estimates just yesterday.

Bean deliveries totaled 735 lots to Nov 3. Tenco, who had stopped most of the beans on delivery so far this week, put out 728 and stopped 77.

More rain is forecast in Brazil the next 7 days, mainly from Parana northward through Mato Grasso. It will be somewhat drier in the south, including Rio Grande, where dry weather is needed. Argentine grain areas will see up to .75" of rain today and tomorrow with a dry weekend and more rain possible early next week in the north but dry in the south. Rain is likely in eastern Australia the next few days but it is getting too late to help the wheat crop there with harvesting underway in the north, meaning rain is not wanted there anymore.

Here in the US, the southwest winter wheat belt will see scattered precipitation early next week, keeping conditions in good shape overall. The midwest saw scattered precipitation the last 24 hours. More is likely today and tomorrow and again early next week while the 6-10 day calls for above normal moisture. This will slow harvesting of corn and beans so it is not welcome.---Vic Lespinasse

Outside Markets Remain Bearish for Grains

A mixed start is expected this am, a few cents higher in beans and a little lower in wheat and corn. The outside markets are a bearish influence for the grains this am with the $ higher while crude oil and the equity markets are lower. Of course, these markets could change by the time the grains open so keep an eye on them again today for a clue as to the direction of the grains.

Weekly export sales this am were about as expected at 366,000 tonnes in wheat, 894,000 tonnes in beans, and 107,000 tonnes in meal. Corn was slow at 471,000 tonnes, as was oil at only 1000 tonnes. Most of the bean business went to China, a total of 642,000 tonnes. Separately, Syria bought 200,000 tonnes of optional origin wheat.

Conab, the Brazilian version of the USDA, cut its bean production guess to 58.85 million tonnes from 60.7 million last month. They cut their corn guess to 54.75 million tonnes from 55.5 million last month.

Pakistan says the US will give it $200 million in credits to buy US wheat, double the amount of US aid that had been expected. This will allow Pakistan to buy roughly 1 million tonnes of US wheat on a FOB basis.

The USDA Nov crop report will be out Monday am. They will estimate world grain crops as well as US. Trade averages for the US bean crop are 2.927 billion bushels with a yield of 39.3 bushels per acre. Corn is guessed at 12.050 with a yield of 154.1. Ending stocks are guessed at 191 million bushels for beans, 1.175 billion for corn and 590 for wheat.

It will be very wet in Brazil the next 10 days, slowing planting of corn and beans, especially in the south where soils are already too wet. Eastern Australian wheat areas will benefit from widespread rain the next 5 days and some rain will even fall in very dry South Australia but it might be too late to help the wheat crop there very much. Argentina had up to .6" scattered rain the last 24 hours in the south. More is likely Fri-Sat and Monday. Northern Argentine wheat areas will remain dry today through Sunday with scattered rain Monday.

Up to 2" of rain fell in eastern parts of the US southwest winter wheat belt the last 24 hours. It will be mostly dry the next few days but more rain is likely Monday, at least in the east. The western corn belt had up to 1" of rain the last 24 hours while the east was dry. Up to 1"more rain is forecast in the west the next two days. The east will see up to .6" today and a little more tomorrow. A dry weekend is expected in most of the corn belt but more rain is forecast early next week and the 6-10 day calls for above normal rain, which will further slow harvest progress.

Mixed Start in Grains with Influence of Outside Markets Possible Again

A mixed start is indicated this am, 1-2 up in wheat and corn, 2 down in beans. The outside markets are a bearish influence for the grains with crude oil and equities lower while the $ is higher. Tenco stopped all 32 beans on delivery this am, the 3rd day in a row they have been the main stopper.

India announced they will make 2 million tonnes of wheat available for export to various countries, a complete change in policy from the last couple of years when India was an importer of millons of tonnes of wheat due to weather problems.

ABARE, the Australian version of the USDA, lowered their Australian wheat production guess from 22.46 million tonnes to 19.9 million due to dry weather problems. Jordan is in the market for 150,000 tonnes of optional origin wheat Nov 19.

The big USDA Nov crop report will be out Monday morning. I should have trade estimates later today or tomorrow.

Widespread, at times heavy, rain is forecast in Brazil's bean and corn areas the next week or longer, slowing bean planting. Widespread rain is forecast in eastern Australian wheat areas the next 5 days, especially New South Wales, but the dry areas of South Australia are likely to remain without needed moisture during this time. Argentina will remain mostly dry today and tomorrow with rain forecast in the south Saturday and again Mon-Tue. Northern areas will see rain Friday and again Monday. All this rain will be welcome.

The southwest US winter wheat belt will see scattered rain today and tomorrow with more Sun-Mon, which will be beneficial for the newly planted crop. The midwest will see up to 1" of rain in the west the next few days. More is likely early next week. The east is expecting up to .6" rain Thur-Fri. More is likely Monday. The 6-10 day calls for above normal rain. All this moisture will further slow harvesting, especially corn, so it is not welcome.

If the outside markets move decisively today, they will once again impact the course of the grain market so keep an eye on them. ---Vic Lespinasse

Election Could Slow Grain Trading Today

A higher start is likely this am, around 2-3 wheat, 3-5 corn and 4-5 beans. Crude oil is higher, the $ sharply lower and equities are strong this am, a bullish combination for the grains.

FC Stone estimated the US corn crop at just 11.990 billion bushels yesterday afternoon with a yield of only 153.4 bushels per acre. Their bean guess was only 2.916 billion with a yield of 39.2. these compare with the Oct USDA numbers of 12.200 billion bushels for corn with a 153.9 yield and 2.983 billion for beans with a 39.5 yield. The trade was expecting a higher corn yield and production guess and a lower bean yield and production guess from FC Stone compared with the Oct USDA so the bean numbers were not a surprise but the corn numbers were a bullish surprise, both coming in below the USDA.

Weekly harvest progress was reported yesterday afternoon at 55% in corn, in line with trade ideas but behind the 89% average pace. Beans were 86% harvested, about as expected, vs 89% average. Winter wheat planting is 90% complete vs 92% average. Winter wheat rated 67% good to excellent vs 65% last week.

Informa is supposed to put out their Nov production guesses at 10:30am, US Central time. Bean deliveries totaled 129 lots this am with Tenco the main stopper again, taking 99 lots. The market could trade slowly again today as traders wait for election results before getting fully engaged in the markets.

Widespread rain is forecast in Brazilian bean areas the next 5-7 days, especially the big bean state of Parana. Scattered Australian wheat belt rain is likely this week but little is forecast in South Australia, which remains very dry. Argentina had up to .70" rain in the west yesterday which was welcome. More scattered, welcome rain is likely today through Saturday, up to 1" or so.

The southwest US winter wheat region will be dry today with up to .75" scattered rain Wed-Thur, with the exception of the southwest part of the belt, where little rain is likely. The midwest was dry the last 24 hours. Rain will sweep across much of the belt starting tomorrow in the west and Thursday in the east, bringing up to 1" in the west and up to .75" in the east by the end of the week. The 6-10 day calls for above normal rain, which could keep corn harvesting slow. --Vic Lespinasse

Higher Start Expected in All Grain Pits

A higher start is expected in all pits, roughly 10 in wheat and beans, 1-2 in corn. Crude oil is lower this am and the $ is a little higher while equities are a shade lower, a bearish combination for the grains.

Bean deliveries were 712 to Oct 21 with Tenco stopping almost 500. China announced they will buy 5 million tonnes of home grown corn to help support domestic prices and they will buy even more if necessary.

FC Stone will put out its Nov crop estimates this afternoon and Informa supposedly will put out its estimates tomorrow am. Traders generally expect higher corn and lower bean production estimates.

The 5 largest index funds, which are always long, were down 23-29% through the first ten months of the year due to the widespread commodity sell-off since last summer. According to another report, conventional funds, which can be either long or short, are short 19,000 corn for the first time since Jan '06. They were long 184,000 at the beginning of July. Index funds are still long 246,000.

Verasun, one of the largest US ethanol producers, has gone bankrupt but they are still operating, at least for now.

Argentina had up to 1/2" scattered rain over the weekend in southern growing areas with more expected today, followed by dry weather Tue-Thur and rain again Fri-Sat. Wet conditions will continue in most Brazilian bean areas this week, which will be welcome in the north but not in the south. An active rain pattern is forecast this week in Australia but significant rain is still not forecast in Southern Australia wheat fields, where it remains extremely dry.

The US southwest winter wheat belt will remain dry the next couple of days with rain forecast the second half of the week, keeping conditions there favorable. The midwest saw favorable harvest weather over the weekend with more good harvest weather forecast the next couple of days. Up to 1.5" of rain is forecast in the west Wed-Thur. Dry weather is likely Fri-Sat. The east will see up to .75" Thur-Sat but enjoy dry harvest weather until then. Corn harvesting could be reported around 55% done this afternoon with bean harvesting around 90% complete.

Keep watching the outside markets for direction in the grains today. ---Vic Lespinasse

Bearish Signals from Outside Markets to Open Grains

A lower start is expected in all pits this am, around 5 in wheat and corn, 12-15 in beans. The $ is higher, crude oil and the equity markets lower this am, a bearish signal for the grains.

JPMorgan put out 241 beans on delivery this am, almost certainly for Cargill, who clears through them. A total of 641 beans were put out on delivery this am, delivered to longs up to Oct 9.

The midwest will continue to see dry harvest weather today through Monday in the west, Wednesday in the east. Rain will then sweep across much of the belt for a couple of days, dropping up to 1.5" in the west and up to .75" in the east. The rain in the west will favor the north. The 6-10 day calls for below normal rain in the west, above normal in the east. Next week's rain will slow harvesting, no big deal for beans, which are only slightly behind normal, but a problem for corn, which remains way behind normal. The southwest winter wheat belt will stay dry until Tue-Wed next week, when up to 3/4" of moisture is forecast in northern and eastern parts of the belt with very light amounts in the western part. This should allow late wheat planting to just about finish.

Widespread Brazilian rain is forecast the next several days or longer, mainly in Mato Grasso and Parana, the two largest bean producing states. Argentina will be mostly dry today through Monday with scattered light rain late Monday into Tuesday, favoring the southern growing areas. Rain benefited West Australia wheat areas yesterday. Welcome rain is forecast over the coming week in West Australia, New South Wales and Queensland states but dry weather will further stress wheat in South Australia during this time.

Keep watching the outside markets for guidance in the grains today. ---Vic Lespinasse

Potent Bullish Combination May Trump Overnight Trading for Grains Opening

A steady/mixed start is indicated by overnight trading but the outside markets all point higher and that is the way I think we will start. Malaysian palm oil gained 125 ringgit today while Dalian, China grain futures were higher. Crude oil and the equity markets are higher while the $ is lower, a potent bullish combination for the grains no matter how they traded overnight.

Weekly export sales were slow for wheat at 460,000 tonnes, and corn at 413,000 tonnes. Oil was in line at 5200 tonnes while meal was toward the low end of trade ideas at 130,000 tonnes. Bean sales were great at 1.457 million tones.

Tomorrow is first notice day for Nov beans and ideas on the size of the deliveries are all over the place, anywhere from 0-1000 lots. September oil stocks were reported at 2.471 billion lbs this am by the Census Bureau vs the preliminary estimate last week of 2.528 billion, which is friendly for oil. However, only 247 million lbs of bean oil were used during the month to make biodiesel fuel (methyl ester) vs 301 million lbs in August.

Beneficial rain is forecast in northern Brazil today and tomorrow, up to 1" each day. More welcome rain is forecast Sun-Mon. Southern Brazil remains too wet with up to 1.5" the last 24 hours. More rain is predicted the rest of the week in Parana, the 2nd largest Brazilian bean producing state, continuing into Monday. Rio Grande, the 3rd largest bean state in the country, will be mostly dry the rest of the week, allowing soaked fields to dry out. Argentine grain fields will be dry the next several days with isolated rain forecast in southern growing areas around Tuesday next week. More rain would be welcome in Argentina to help developing wheat and newly-planted corn and beans. Only light, isolated rain is forecast in the dry South Australian wheat areas over coming days, keeping the crop there under stress.

The US southwest winter wheat belt will remain dry today through Tuesday, allowing late planting to finish. The midwest will see continued dry harvest weather through Monday in the west and Tuesday in the east before wet weather returns to the belt, slowing harvesting once again.

Keep watching the outside markets for direction in the grains.---Vic Lespinasse

Higher Grains Start Expected Despite Lower Equity Markets

A higher to sharply higher start is likely this am, roughly 10 in wheat, 7-10 in corn and 25-30 in beans, similar to overnight gains. Traders will continue watching the outside markets for direction in the grains and currently they are pointing the grains higher with steep gains in crude oil and a lower $. Equities markets are lower this am but not enough to negatively impact the grains - a situation that could change if equity markets move further to the downside. Malaysian palm oil was 24 ringgit lower. Dalian, China grain futures were mixed today.

Jordan bought 100,000 tonnes of wheat, likely Black Sea origin.

Scattered rain in both southern and northern Argentina yesterday totaled up to 1" in the south and up to .75" in the north with mostly dry weather forecast today through Monday. This rain is welcome for late wheat development and early corn and bean growth. Up to .75" scattered rain is forecast in northern Brazil tomorrow with more expected Friday, all of which will be welcome for early bean growth. Southern Brazil continues to have too much rain, up to 1.25" yesterday with more today and tomorrow.

The US southwest winter wheat belt will be mostly dry today through Monday with warm temps, allowing late planting to proceed. The midwest will welcome dry harvest weather for corn and beans today through Monday but the 6-10 day calls for above normal rain, which could once again slow harvesting.

Keep watching the outside markets for direction in the grains today.---Vic Lespinasse

Pre-Open Update

The excitement surrounding the revised Oct USDA crop report has died down a bit with many traders now thinking we will not be nearly as strong this am as we were overnight because the revisions to the report were not as big as many expected. The latest call is roughly 10 higher in wheat, 10-15 up in corn and 25-30 better beans. These numbers could shift higher or lower depending on how the outside markets are doing as we get closer to the grain markets opening. Traders note the USDA only lowered the bean carryover by 15 million bushels despite cutting the production number by 45 million due to a cut of 30 million in exports. They also only cut the corn carryover by 66 million despite a 167 million cut in the production guess due to a cut of 50 million bushels each in corn exports and feed demand. Many traders still expect a lower bean production and yield estimate from the USDA in their next report, Nov 10, and a higher corn production and yield estimate.

Unprecedented USDA Report Revision Pushes Grains Higher

A sharply higher start is expected in all pits this am, especially corn and beans, following the USDA's unprecedented mid month revision of the October crop report due to discrepancies in the database. The USDA now estimates the corn crop at 12.033 billion bushels vs 12.200 originally on Oct 10. They estimate the bean crop at 2.938 billion vs 2.983 billion on Oct 10. Ending corn stocks were put at 1.088 billion bushels vs 1.154 previously. Ending bean stocks came in at 205 million bushels vs 220 previously. Corn acreage is now guessed at 78.2 million acres vs 79.2 previously with bean acres 75.9 against 77 before. The bean yield was unchanged at 39.5 bushels per acre but corn fell slightly to 153.9 vs 154 before. Corn used to make ethanol is still estimated at 4 billion bushels and bean oil used to make biodiesel fuel (methyl ester) remains unchanged at 3.1 billion lbs.

The early call is very roughly 20-25 up in wheat, 25-30 higher corn and 50-60 higher beans. The outside markets also are bullish this am with the $ lower, equities sharply higher and crude oil higher.

The weekly crop progress report yesterday afternoon showed winter wheat planting 84% done vs 88% average with the crop rated 65% good to excellent vs 55% last year at this time. Corn harvesting is 39% complete against 66% average while bean harvesting is 76% done vs 83% average. These harvest progress numbers were at the high end of trade ideas, especially for corn.

Mato Grasso, Brazil's largest bean producing state, will see welcome rain Thur-Fri. Southern Brazil will see more unwanted rain the rest of the week, especially in Parana, the second largest bean state. Argentina will welcome up to 1" of scattered rain today with dry weather the rest of the week. Rain will benefit Western Australian wheat areas the next day or so and welcome rain is possible in Southern Australia later in the week, where it is badly needed.

The US southwest winter wheat belt will be dry the rest of the week. The midwestern corn belt will also be dry the rest of the week. The 6-10 day calls for wet weather in the west, below normal rain in the east.

Expect very strong markets all day unless the outside markets sell off sharply.---Vic Lespinasse

Open Interest in Commodities Falling with Decline in Economic Conditions

A lower start is likely across the floor this am. Lower prices this am in equities and energy along with a higher $ present a bearish pattern which the grains will likely follow. Overnight losses were not that severe but, depending on what the financial markets are doing shortly before the grains open we could be down more than we were overnight. The tentative call is around 5-10 lower in wheat and corn, 3-5 down in beans. Once again, grain fundamentals mean little as the financial markets continue dominating the direction of the grains.

There is some wheat export interest with Iraq and Syria in the market for optional origin wheat. The US has a chance to capture some of the Iraqi business but little chance with Syria.

Australian Crop Forecasters, a private forecaster, is lowering its Australian wheat production guess. Just last week they put the crop at 20 million tonnes but now they are saying they think the crop is only between 19-20 million, probably closer to 19, due to ongoing dry weather in southeast Australia. Light weekend rain fell in parts of southern Australia with more possible there this week but some think because it is so late in the season the benefit to the crop will be minor compared to what it would have been had rain come earlier. Rain is also forecast this week in Western Australia, where it is still welcome.

Argentina saw up to .5" over the weekend in northern wheat areas but southern areas were dry. Up to .75" scattered rain is forecast tomorrow with dry weather Wed-Sat.

The US southwest winter wheat belt was dry over the weekend and will stay that way this week, allowing planting to finish. The midwest saw scattered weekend rains and mostly dry weather is likely this week, allowing corn and bean harvesting to make rapid progress.

Open interest keeps falling for most commodities as funds liquidate positions due to declining economic conditions. One report states open interest in major US commodities reached its lowest level since May 2006 by Oct 21. Just since the begining of this year, open interest in wheat has fallen from 427,000 lots to 277,000, corn is down from 1.287 million to 987,000 and beans are down from 555,000 to 361,000, all as of Oct 21.

Keep watching the financial markets for direction in the grains today. ---Vic Lespinasse

Grains Tightly Locked to the Financials Again Today

A sharply lower to possibly limit down opening is expected, following the financial markets this am. The fate of the grains will probably be locked tightly to the financial markets all day and the financials are likely to be painfully lower all day. Traders will focus on the equity and credit markets today along with the energy and metals as well as the $, which is screaming higher - a bad sign for all commodities, including grains.

Pakistan's Agriculture Minister said Pakistan will import 750,000 tonnes of optional origin wheat within the next 2 weeks. Malaysian palm oil fell 160 ringgit today.

Over the last 24 hours, southwest Australia had up to .5" of welcome rain but dry weather is forecast in the rest of the country the next 5 days or more, which will increase stress on the wheat crop. Warm and dry weather will be featured in northern Mato Grasso, Brazil's largest bean growing state, the next 5 days or more. Favorable weather is forecast in Parana, the 2nd largest bean state. Argentina will be dry the next 3 days but up to 1.5" of rain is forecast the first half of next week, which will be welcome in wheat, corn and bean areas.

The southwest US winter wheat belt will be mostly dry the next 7 days or more. The midwest saw up to .5" of rain in the west and up to 1" in the east overnight. The west will be mostly dry tomorrow through Thursday while the east will see up to 3/4" today followed by dry weather tomorrow through Thursday. This dry period will allow for harvest progress in corn and beans once fields dry out from the latest rain event.

The grains showed some independence from the financial markets yesterday but don't expect this to happen today.---Vic Lespinasse

Mixed Open in Grains Possible as Outside Markets Send Changing Signals

A mixed start is indicated this am but even this is only tentative as traders continue watching the outside markets for direction and they are sending changing signals currently. The $ is higher but not nearly as much as it has been the last couple of days. Equities are lower but not that much and they have recovered from early lows. Crude oil was a little lower before but now it is a little higher. Grain prices were mixed but mostly better overnight and we could see a similar start this am.

Weekly export sales were a little on the light side for wheat, 384,000 tonnes. Oil was poor, only 3300 tonnes and beans were about as expected, 784,000 tonnes. Corn was toward the upper end of trade ideas at 790,000 tonnes while meal was very good, 263,000 tonnes.

The Census Bureau Sep crush was slightly below trade ideas, 125.7 million bushels. Despite this lower crushing pace, oil stocks were over 100 million lbs higher than expected, 2.528 billion lbs. Meal stocks were less than indicated, 294,000 short tons according to one wire service, 289,000 according to another wire service. This crush report will be negative for beans and oil this am.

Chinese bean imports the first half of Oct were only half the level of the last half of Sep, 723,000 tonnes vs 1.35 million tonnes. Traders had expected total Oct imports of 2-3 million tonnes, a figure that is now unlikely to be achieved.


A high pressure ridge has moved into northern Brazil and it could cause hot and dry weather the next week or more in Mato Grasso, Brazil's largest bean producing state, stressing newly planted beans there. Argentine wheat areas were dry the last 24 hours with more of the same forecast today through Monday, followed by scattered, welcome rain Tue-Wed.

The southwest US had rain or snow the last 24 hours with light precipitation expected today and mostly dry weather Fri-Tue. The western corn belt had up to 3-4" heavy rain in some areas the last 24 hours, while the eastern half of the belt was dry. Light rain is forecast in the west today and tomorrow, followed by welcome dry weather. All this moisture will further slow harvesting of corn and beans. The east will see up to 1" of rain today-tomorrow with lighter amounts Saturday. The 6-10 day calls for below normal rain, which will be welcome as farmers try to continue harvesting. ---Vic Lespinasse

Financials Markets and Recession Fears Continue to Drive the Grains

A lower start is expected in all pits this am, roughly 10-15 in wheat, 15 in corn and 15-20 in beans. Dalian, China grain futures were sharply lower today, crude oil and the equity markets are sharply lower again and the $ is rocketing higher, all bearish signs for the grains. You can ignore the fundamentals, what is driving the grains are the financial markets and the growing fears of a worldwide economic slump.

There is an article on page A3 of today's Wall Street Journal about the tough times farmers are facing with falling prices and rising costs. Egypt is in the market for wheat and results should be known before we open today but unless they buy a lot of US origin it probably won't make much difference as traders keep focusing on the financial markets.

The CFTC is extending the comment period to Dec 4 for review of the proposed changes to the wheat contract, designed to fix the problem of divergence that we have discussed before.

Welcome rain is expected in northern Brazilian bean areas the next day or two, followed by hot and dry weather. Argentina had beneficial scattered rain the last 24 hours in northern wheat growing areas with dry conditions likely today through Friday. More northern rain is forecast Saturday, which will be welcome.

The US southwest winter wheat belt had up to 1.25" of rain the last 24 hours. More is forecast today and tomorrow with dry weather over the weekend into early next week. The western corn belt had harvest delaying rain scattered in the region yesterday, up to 1" while the eastern half of the belt was mostly dry. Up to 2" is forecast in the west today-tomorrow before dry weather returns. The east will be dry until tomorrow night with scattered rain of up to 1" on Friday and more early next week.

Keep watching the financial markets for direction in the grains. ---Vic Lespinasse

Bearish Signals from Outside Markets Indicate Lower Grains Open

A lower start is indicated this am, 3-5 wheat, 5-10 corn and 15 beans, in line with overnight losses. The $ is higher, crude oil and the equity markets lower this am, all bearish signals that the grain market will not ignore. As has been the case so often lately, traders will keep watching these outside markets, especially the financial ones, for direction in the grains throughout the day.

Corn harvesting was reported just 29% done last night in the weekly crop progress report vs 53% average. Beans were 67% done vs 74% average. These numbers were in line with trade ideas. Winter wheat planting is 79% done against 81% average.

Three analytical firms have cut their estimate of the Australian wheat crop since late last week, the latest being Australian Crop Forecasters, which is now predicting a 20 million tonne crop vs 21 million previously. All these firms have reduced their guess due to ongoing dry weather problems in parts of the wheat belt, especially the southeast. The current USDA guess is 22 million tonnes while ABARE, the Australian equivalent of the USDA, is 22.5 million tonnes, a figure that is likely to be reduced in their next report.

Starting Friday, Jan beans will replace Nov as the top month in the bean pit.

Argentine wheat areas enjoyed up to 1.25" of scattered rain the last 24 hours. Up to 1 1/2" is expected to be scattered over the belt today with dry weather Wed-Thur. Rain is likely again Fri-Sat in the northern part of the belt. All this rain will be welcome. Australia will see welcome rain in the west the next few days but South Australia will remain dry with very hot temps later in the week, further stressing the crop before cooler weather returns early next week. Mato Grasso, Brazil's largest bean state,will see scattered rain the next few days but hot and dry weather is forecast over the weekend. Bean planting is going at a slow pace so far this season in Mato Grasso. Oil World magazine is warning that the high price of fertilizer coupled with tight credit conditions for farmers will trim Brazilian bean production this season by 1-3 million tonnes.

The US southwest benefited from scattered rain overnight and up to 2.5" more is forecast the next 3 days, favoring central and eastern areas, before dry weather returns for the weekend. The western corn belt was dry the last 24 hours but scattered rain fell in northern parts of the eastern belt. Up to 2.5" of rain is forecast in the west today-Thursday, with dry weather over the weekend. The east will see up to 1" of rain Thur-Sun. All this rain, especially in the west, will further delay harvesting, keeping corn seriously behind normal. ---Vic Lespinasse

Higher Grains Start Expected As Confidence Grows

A higher to sharply higher start is expected this am, roughly 7-10 wheat, 10 corn and 35 beans following similarly large overnight gains. Dalian, China grain futures were much higher again today with beans limit up again as China moves to build a 1.5 million tonne state reserve of this crop.

Strength in the equity markets was behind the big overnight gains in the grains while other commodity markets were also mostly higher. All this reflects growing confidence in the world financial system and if this attitude continues during the day, commodity prices, including grains, should continue well supported also.

Another private forecaster cut his Australian wheat production guess due to ongoing dry conditions in parts of the Australian wheat belt. Western Australia will benefit from rain and cooler temps this week but South Australian wheat prospects will continue declining from dry weather with little relief in sight. Temps are forecast to be very hot in South Australia late this week, further stressing the wheat crop there. Scattered weekend rains fell in Mato Grasso, Brazil's largest bean producing state, and more beneficial, welcome rain is forecast there early this week, along with cooler temps. Argentine wheat areas had a mostly dry weekend but welcome rain is expected tonight into tomorrow, up to 1.5" before dry weather returns the second half of the week.

The US southwest winter wheat belt was generally dry over the weekend but up to 1.5" rain is forecast tomorrow to Thursday. The midwest was mostly dry over the weekend with up to 2" rain forecast for the west Tue-Wed and scattered rain forecast Thursday while the east will see up to 1" light rain in the north today and Thur-Fri. The 6-10 day predicts cooler and drier weather, which should aid harvest efforts in corn and beans.

Nov bean options expire Friday. The latest committment of traders report Friday afternoon showed index funds liquidated more positions as of last Tuesday: 14,000 corn, about 5000 each in wheat and beans and 3000 oil.

Traders will keep watching the financial markets today for guidance in the grains. ---Vic Lespinasse

Grains May Be Oversold; Persist in Following the Financial Markets

A higher start is expected in all pits this am, 5-10 wheat, 5-7 corn and 10-15 beans. These calls are highly tentative, of course, as the grains remain dependent on the direction of the financial markets as much, if not more, than the fundamentals in the grain market. Currently, the $ is higher, crude oil is lower and the equity markets are down, although not as much as earlier this am. All these outside markets are bearish for the grains and could cause them to open lower despite overnight gains in the grains.

Weekly export sales were toward the low end of trade ideas in wheat, 436,000 tonnes. The rest were very good, 975,000 tonnes of corn, 1.028 million tonnes of beans, 242,000 tonnes of meal and 16,000 tonnes of oil, which could lend support to the opening in these pits. Many traders think the grains are oversold and overdue for a technical correction, which was one of the reasons for yesterday's late rally. Any recovery in the outside markets would likely trigger a strong upward response in the grains today, which will keep the bears on guard and all eyes once again on the financial markets.

Australia will see mostly dry weather the next week or so, further stressing the already dry wheat crop in South Australia and elsewhere. In Mato Grasso, Brazil's largest bean producing state, very hot and dry weather will persist the next couple of days before cooler weather moves into the region with some rain early next week. Argentina will be mostly dry today-Sunday with welcome scattered rain of .3-1.5" Mon-Wed.

The US southwest winter wheat belt will be dry the next few days but .3-1.5" of welcome rain is forecast Mon-Wed in northern, eastern and some central areas. The midwest was mostly dry yesterday. Scattered rain of .5-1.5" will fall in the west Tue-Wed with .25-1" of scattered rain in the east the second half of next week. The 6-10 day predicts above normal rain for the belt. All this moisture will slow already delayed harvesting of corn and beans. ---Vic Lespinasse

Outside Markets and Harvest Pressure Weighing on Grains Today

A lower start is likely this am, 5 in wheat, 1-2 in corn and 7-10 in beans. Crude oil, the $ and Dalian, China grain futures are all lower today a reflection of the overall bearish economic situation. Traders will keep watching the credit and equity markets for direction as these financial markets remain a major influence on the grains.

In the background, harvest pressure continues to weigh on the grains while worldwide recession worries continue to weigh on all commodity markets, including grains. Weekly export sales will be out tomorrow am, delayed by Monday's holiday.

Argentina's agriculture secretary said bean planting this year will be up 7-10% vs last year, reaching 17.8-18.2 million hectares. Land originally intended for wheat but either not planted or plowed up due to severe drought this season may be planted with beans. Wheat production this year is now estimated at only 9.5-11 million tonnes vs the upwardly revised 16.3 million tonnes produced last year. The current USDA estimate for Argentine wheat production is 12 million tonnes. Finally, the corn hectare estimate was cut to 3.4 million hectares vs the previous estimate of 3.5 million. The next chance for rain in Argentina is early next week with showers expected to favor northern rather than southern growing areas.

Only light, isolated rain is forecast for Australian wheat areas the next several days, increasing the need for more moisture there soon.

The US southwest winter wheat belt had up to 1.5" of rain the last 24 hours in the east but the west was mostly dry. Dry weather is forecast today through Monday with rain Tue-Wed in central and eastern areas. The 6-10 day calls for wet weather in the east and below normal rain in the west. The midwest saw scattered rain yesterday, especially in the east with up to .75". The west will be dry today through Saturday with scattered rain Sunday and again Tue-Wed. The east will be dry today-Sunday with rain Monday and again Wed-Thur. The 6-10 calls for above normal rain, which could slow corn and bean harvest progress.

Watch the financial markets again today for direction in the grains. ---Vic Lespinasse

Grains Likely to Continue Following Financial Markets

A lower start is expected this am, how much will be determined by the financial markets condition as we get closer to the grains opening. The very tentative early call is down 2-3 in wheat, 1-2 in corn and beans. Crude oil, equities and Dalian, China grain prices are all lower this am but all eyes are on the equity and credit markets for direction in the grains again today.

Corn harvesting was slower than expected at just 21% vs 41% average. Beans were only 51% done vs 61% average. Maturity lags normal also with corn 86% vs 95% average and beans 91% vs 96% average. Winter wheat planting is 73% done, the same as the average.

The USDA announced the sale of 120,000 tonnes of US beans to an unknown destination this am. The Baltic Exchange dry sea freight rate fell almost 11% today to 1615, hitting a 5 1/2 year low. It is now down 86% from its May high. Cheaper freight rates makes it less expensive to ship grain overseas. The US gulf to Japan rate has fallen from about $120 a tonne to just $40 a tonne, the equivalent of around $2 a bushel for corn.

There is more talk about the possibility of less expansion or even a cut back in South American bean planting due to credit problems in Brazil and government policies in Argentina, which would be bullish for US bean prices over coming months.

No rain is forecast in Argentina's wheat belt until early next week. Mostly dry weather is forecast in Australia's wheat belt for at least the next several days.

The US southwest winter wheat belt had up to 1 3/4" of scattered rain the last 24 hours with more forecast today. Dry weather is forecast Thur-Mon but the 6-10 day outlook calls for above normal rain, which will be welcome. The western corn belt saw up to 1" of rain yesterday but the east was dry. It is raining in parts of the east today, however. The west and east will see scattered rain today but dry weather Thur-Mon. The 6-10 calls for wet weather in the west but below normal rain in the east.

Watch the financial markets again today for direction in the grains. ---Vic Lespinasse

Strong Start Expected as Grains Continue to Follow Outside Markets

A strong start is indicated this am, up roughly 15 in wheat, 10-15 in corn and about 20-23 in beans. Traders will keep watching the equity and credit markets for direction in the grains, as was the case yesterday, and right now these markets point higher. The $ is lower while crude oil and the Dalian, China grain markets are higher, all supportive for our grain market.

The September NOPA (National Oilseed Processors Association) crush was a bit less than expected at 120.4 million bushels with oil stocks a bit higher than expected, 1.988 billion lbs, a little negative for beans and oil.

Weekly harvest progress will be out this afternoon with traders looking for around 50-55% of the bean crop to be harvested with 30-33% of the corn crop done. Average progress for this time of year is around 96% for beans and 41% for corn so we remain well behind normal.

Down in Brazil's Mato Grasso state, their largest bean producer, 5% of the beans have been planted vs about 2% average. There is a report Brazilian farmers have only bought 24% of their fertilizer needs as of last month vs about 70% usually for that time. This is probably due to farmers cutting back due to the very high cost of fertilizer and it could result in lower bean yields in Brazil this year. Sep Chinese bean imports were a record 4.13 million tonnes. China exported no corn during the month. Chinese corn exports the first 9 months of the year are down 96% vs last year while their bean imports are up 32% during this time over last year's pace.

Traders expect a higher corn and lower bean yield estimate in the next USDA crop production report on Nov 10. Every year since 1995 the corn yield guess in Nov has gone the same direction as the Oct yield guess. The yield this month went up vs Sep so it should go up next month as well. Traders expect a lower bean yield from the USDA next month for the same reason: Every year since 1995 but one the Nov yield has gone in the same direction as the Oct yield guess and this month the yield estimate went down so it will probably go down next month.

Australian wheat areas will be mostly dry the next several days. Argentine wheat areas saw up to 1" of scattered rain yesterday and up to 1/2" is forecast today before dry weather returns Wed-Sun.

The US southwest winter wheat belt saw up to 1.5" of welcome rain yesterday with up to 1.5" forecast today, favoring the central and western areas. The 6-10 day calls for above normal rain, which will be welcome. The midwest saw scattered rain in the west yesterday with mostly dry weather in the east.The west will see more scattered rain tomorrow, up to 1", with dry weather Thur-Sun. The east will see up to .5" scattered tomorrow with dry conditions Thur-Sun.

Weekly export inspections will be out at 10am US Central time.---Vic Lespinasse

Higher Start Likely in Grains; Goldman Sachs Cuts Long-Term Crude Price Estimate

A higher start is likely in all pits this am, roughly 15 in wheat and beans, 5-7 in corn. Today is Columbus Day in the US which could slow volume. The outside markets are very bullish this am as far as the grains are concerned with the equity markets sharply higher along with crude oil while the $ is lower.

Goldman Sachs, who has been bullish on crude oil for a long time, and correctly so, cut their outlook for the price of crude at year end from $115 to $70 and they said it could fall as low as $50. They estimated year end 2009 crude oil at $107 vs $125 previously. Grains are influenced by crude oil's direction and traders pay more attention to Goldman's forecast since they have been right in the past regarding crude oil's direction.

We have expanded limits in all the grains except wheat today: 45 cents in corn, 1.05 beans, $30 meal and 350 points oil. According to Friday's Committment of Traders report, as of last Tuesday's close, index funds were long 286,000 lots of corn, down 20,000 lots from the previous week. They were long 116,000 beans vs 130,000 the previous week and long 154,000 wheat against 162,000 the week before.

Egypt bought 120,000 tonnes of US soft red winter wheat, the type we trade here in Chicago. They also took 145,000 tonnes of Russian wheat.

Light, scattered rain fell in parts of Australia's wheat belt the last couple of days and more is expected the next few but south Australia remains dry, reducing the outlook for the wheat crop there. Argentine wheat areas enjoyed widespread rain over the weekend, up to 1.5", and more is expected today and tomorrow before dry weather returns Wed-Sun.

Widespread rain up to 2" fell in the US southwest winter wheat belt over the weekend. Up to 1.5" more is forecast today through Wednesday. Dry weather is likely Thur-Sat. The midwest saw rain in the west but mostly dry weather in the east over the weekend. Up to 1" of additional rain is forecast in the west today through Wednesday followed by dry weather the rest of the week. The east will be dry the next two days but up to .6" is forecast Wednesday with dry conditions again Thur-Sat. The 6-10 day calls for above normal rain in the west and below normal rain in the east.

Watch the outside markets again today for overall direction in the grains.---Vic Lespinasse

USDA Crop Report: Bearish

The grains will be slam-dunked this am by the bearish financial markets and the bearish USDA report. The early call is sharply lower to limit down. More specifically, wheat is called 20-25 lower, corn 20-30 and beans 45-50 but we could see limit losses on or shortly after the start in some pits, especially if the financial markets meltdown continues. Crude oil is lower, the $ is slightly higher, equity markets are sharply lower around the world (but we are coming back from lows this am in US equity markets) and the Dalian, China grain futures market was sharply lower to limit down today. All of this is bearish for our grain markets, which is why they were sharply lower overnight.

The USDA numbers were almost all bearish: corn production of 12.200 billion bushels with a yield of 154 bushels per acre; beans 2.983 billion with a yield of 39.5 bushels per acre; corn ending stocks of 1.154 billion bushels; beans 220 million; wheat 601 million; meal 300,000 short tons and oil 2.040 billion lbs; world ending stocks of 107.8 million tonnes for corn, down from 109.9 million estimated last month and one of the few bullish numbers in the report; beans 55.24 million tonnes vs 51.23 million last month; 144.4 million tonnes of wheat vs 139.9 million tonnes last month; 6.3 million tonnes of meal vs 6.26 last month and 2.48 million tonnes of oil vs 2.62 million last month. The USDA cut Argentine and Australian wheat production estimates 500,000 tonnes each but this was expected. They also upped Canadian wheat production to 27.3 million tonnes vs last month's guess of 25.4 million.

The Argentine farmers strike is over, at least for now.

Widespread, very welcome rain is forecast for Argentine wheat areas tonight through the weekend, favoring northern growing areas. More dry weather is forecast in southern Australian wheat areas over coming days, further stressing the crop there. Good growing conditions are expected to remain in New South Wales, the second largest wheat growing state. Meteorlogix Weather says there is more talk about possible damage in western Australian wheat areas from last month's frost.

The US delta will remain dry through Monday, allowing more bean harvest progress, before rain moves into the region Tue-Wed. The southwest winter wheat belt will see welcome rain this weekend into early next week, bringing .75-2.5" amounts to the area. The midwest was mostly dry the last 24 hours. Rain will fall in the western half of the belt Sun-Tue, .3-1.5". The eastern half of the belt will be dry until rain arrives Mon-Wed but in only light amounts.

Click here to view the full USDA Report.