Morning Call by Bryce Knorr

Most markets are trying to move higher this morning, with the final tone for the session likely determined by release of January employment data ahead of the open.

Corn could see a little follow-through buying following Thursday’s stronger close, with futures attempting to cement a seasonal move higher. However, overnight gains were very tentative, with headline risk this morning on traders’ minds.

Export Sales totaled 38.4 million bushels in the latest week, better than guesses, raising hopes that USDA is up to 100 million bushels too low on its forecast for the marketing year. China booked a load of new crop, with futures on the Dalian exchange in China moving to their best level since September. However, a little more corn could be hitting the market from Ukraine, whose shipments to Iran have been disrupted by international sanctions.

In other export news this morning, South Korea booked 2.2 million bushels from the U.S. and another 2 million bushels of optional origin, while Taiwan is also working a tender.

Volume edged 3% higher Thursday to 322,051, according to the preliminary report from the CBOT. Open interest was up 1,197 on light fund buying.

Futures traded quietly overnight until the open in Europe, when markets began to gather strength. The PMI for the euro zone notched a small expansion in January, buoying hopes the region could avoid a nastier downturn. At the same time a weaker PMI in China could cause the government there to continue easing credit restrictions, a move many have been expecting since the end of the Lunar New Year holiday this week.

Greece is trying to finish negotiations with private bondholders on refinancing its massive debt in time to present a package of reforms to yet another meeting of European finance ministers on Monday. However, deadlines have come and gone as crisis drags on.

Those stories likely will take a back seat to this morning’s Monthly Employment Situation, which may show jobs growth in January slowing to 150,000. Weekly Unemployment Claims reported Thursday fell more than expected, in a precursor to the data. Other reports out today include Durable Goods and Factory Orders, which may show less improvement that the previous month, while the ISM Non-Manufacturing index is expected to be steady. Productivity and Labor Costs reported yesterday showed mixed results, with productivity growth slowing and costs up.

The dollar is a little weaker ahead of the jobs data, helping commodities and keeping gold and crude oil firm..

Soybeans look ready for a stronger start to the session, with chart signals looking better. March futures confirmed a close over its 100-day moving average Thursday, rallying up to the trendline drawn off January highs overnight, a level that comes in around $12.26.

Rains were very spotty in Argentina and southern Brazil over the past 24 hours, a pattern that could continue into the weekend. The latest American weather model maps for South America show most areas getting good coverage over the next two weeks, though southern Argentina could be on the light side.

Export sales were disappointing for the latest week at only 13.5 million bushels, but a very firm tone to Gulf basis spurred hopes of a new round of Chinese buying. For more see my Weekly Basis Review and Cash & Basis Charts.

Vegetable oil prices in Asia moved higher today. Futures on Malaysian palm oil gained almost 1%, though soybean oil posted only a small advance on the Dalian exchange in China, where soybeans edged lower.

Volume in soybeans fell 9% Thursday to 169,028, while open interest gained only 659 thanks to a little fund buying.

Wheat could bounce back from yesterday’s selloff today, after holding a test of support at the trendline off January lows overnight. However, cautious trade could be seen into the weekend, thanks to an export outlook that remains muddled.

Weekly export sales totaled 20.4 million bushels, with hard red winter wheat accounting for almost two-thirds of the total, in its best showing since March 2011.

Traders originally thought a decision on Russian export duties could come before the open this morning, but a key meeting appears to have been delayed again as countries exporting out of the Black Sea try to get their arms around various logistical and weather problems that could hamper grain flowing out of the vital region. In addition to ideas weather could cut Ukraine production 30% to 50%, rail car shortages are keeping wheat out of position. Ukraine announced a ban on rail cars leaving the country as it tries to get more grain flowing to Black Sea ports that are frozen by bad weather.

Temperatures are frigid again this morning from Ukraine into eastern Poland, bringing record cold that could cause winterkill in some areas due to lack of snow cover. Temperatures could start easing by next week.

Other emerging producers, meanwhile, are enjoying better conditions. India projects record wheat production in 2012 that could allow more exports from a surplus over production of more than 400 million bushels.

In the U.S., dry hard red winter wheat fields are getting much needed moisture from a big storm moving through the region, though totals in the Panhandle appears to be lighter as forecast. The five-day coverage map keeps the Dakotas dry with southern Nebraska and the eastern half of Kansas benefiting the most. Official 6- to 10 and 8- to 14-day forecasts out yesterday show below normal precipitation for the central Plains, though overnight maps held out another chance for moisture late next week in the southern part of the region. The latest American model appears to be backing off that precipitation, however.

Volume in Chicago fell 18% on Thursday to 122,678. Open interest gained 1,967 on additional fund selling. Futures on milling quality wheat in Paris this morning were up around 1%.