Pre-Opening Wheat Market Report

July wheat was down 4 1/4 cents late in the overnight session. Outside market forces look somewhat supportive with a weak US dollar, but the sharp break in silver and weakness in energy markets is seen as a negative force. Deliveries for May wheat were 50 contracts. The market has seen volatile trade for April, and this may continue for much of May, as it sorts through weather issues from the US, Canada, Europe and China. Lower production due to weather clash with some expectations that Russia, Ukraine and India will be in a position to boost exports. Western Australia remains very dry going into the planting season. Traders see some increased chances of rain for the eastern plains winter wheat areas of the US into next week, which might help ease dryness stress. Western growing areas need rain, as crop conditions continue to deteriorate. July wheat closed slightly higher on the session yesterday after choppy and two-sided trade. The market managed to shake-off weakness in other grains and a collapse in silver prices and inch higher into the close. A negative tilt to outside markets with a strong US dollar and weakness in metals, equities and energy markets helped to pressure the market early. With the governments of both China and India embaring on tightening measures, commodity markets in general have seen increased selling pressures. Talk of huge wheat stocks and storage issues in India plus better rains for China's winter wheat areas forecasted into the weekend were seen as negative factors. The USDA attache in India believes that production for the 2011/12 season, which began in April, will reach a record high 84.2 million tonnes, up from 80.8 million last year and 80.68 million two years ago. This suggests the could export as much as 2 million tonnes this year, their first export program in five years. The market saw periods of selling during the session yesterday, with active fund selling pressuring soybeans, corn and other commodity markets. However, dry weather for the southern plains in the US, deteriorating crop conditions for the winter wheat crop, the slow pace of spring wheat plantings and dryness concerns in Europe helped to provide support for a turn to higher on the session. For the US, traders see winter wheat production near 1.38 billion bushels, which is down from 1.485 billion last year. This is despite a sharp increase in planted area. Kansas' production estimates ahead of the industry crop tour are around 280 million bushels, down from 360 million last year. Poor crops are expected for Texas and Oklahoma, and traders will continue to monitor reports from the crop tour this week.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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