CBOT wheat, corn modestly lower and soybeans steady in light volume as profit taking was evident across the grains complex as traders look to book profits following the recent run up.

Macros were mostly negative with crude ending lower on weak US housing sales and comments from the EIA to the effect that high crude prices is hurting demand. Firm cash markets across the US are providing support for futures but markets will need more adverse weather to keep pushing higher with prices already at historically high levels.   Weekly US export sales were better than expected for corn and wheat. Strong new crop sales were evident for wheat. Weekly corn sales were the strongest in several weeks.

EU weather forecasts took rain out in the next week but added it in the second week. Production forecasts are being lowered and they need rain.

No more rain across WA in the past 24 hours but there has been 20 mm across much of the northern and eastern wheat belt this week which will see most of the crop planted in these areas which would account for close to half of the states wheat area. Falls were lighter in the Great Southern and they need more rain.

• Corn – A setback today as market marking time - the December 11 contract has seen only a 63 cent range (high/low from last Thursday). Support continues to come from wet forecast and planting challenges in parts of the corn belt. Ohio is the area that’s had major issues with excessive rain fall –North Dakota was struggling but is seeing activity this week. Corn export sales were decent at 33.2 mbu for old crop and 12.1 mbu for new crop. The trade range was 31-39 mbu. Old crop corn basis continues to be a topic in the trade. Yesterday there was Eastern Corn Belt basis trades of excess of +.50N for JJ and today it seems like that pressure is working into IL with processors and rail markets firming up.  

• Wheat - The wheat market seemed to catch momentum earlier this week as concerns over world weather surfaced. Parts of France and Germany continue to be dry and there is more talk of the dryness in Russia. Since Monday we have seen over a dollar rally in July futures. Including the overnight we had a 30 cent trading range today. Export sales were 4.7 mbu old crop and 24.7 mbu new. This was at the top end of the trade expectations. Wet conditions have led to a moderate/high risk for scab in some wheat growing areas of Ohio. Northern and Central Ohio are not at risk yet, but Southern parts of the state are at a critical growth stage and wheat should be protected with a fungicide application at flowering. 

Australian Dollar: A strong rally in Australian equities was enough to support the currency from the outset on Thursday pushing it towards 1.0680 where it spent most of the Asian session. The market is prepared to buy the Aussie on any dips at the moment even as recent weaker-than-expected economic data suggests the pressure has eased on the Reserve Bank to raise rates when they next meet in June. During the offshore session, the Aussie moved to a low of US106 cents where the buying interest emerged once again, mainly due to softer-than-expected data releases in the United States. The Aussie opens at 1.0660 on Friday 20th May 2011

cheers Robbo