Markets

Pre-Opening Wheat Market Report

September wheat was up 11 1/2 cents late in the overnight session. Outside market forces looked supportive, with higher trade in other agricultural markets and in metals and energy markets overnight. The downtrend has been led by improving weather in Europe and active harvest pressures in the US, which has sparked active fund long liquidation selling. Fewer pressures from outside market forces overnight, some light concern for heat moving into Russia, and deteriorating spring wheat crop conditions in the US lent support. The weekly Crop Progress Report, showed 95% of the crop spring wheat crop was planted as of Sunday, compared to 91% last week and 100% last year. The 10 year average for this time of year is 100%. North Dakota is only 90% planted, and this leaves about 710,000 acres that are likely to go unplanted this year. The spring wheat crop is now rated 69% good/excellent, compared to 72% last week and 84% last year. The 10 year average for this time of year is 71%. The winter wheat harvest is now 44% complete compared to 31% last week and 36% last year. The 10 year average for this time of year is 41%. A hot and dry outlook suggests there will active progress this coming week. Traders believe that the USDA's planted acreage estimate for the spring wheat, which will be released Thursday morning, will be about 1.0-1.1 million acres down from the March estimate of 14.427 million acres. Traders see wheat stocks on June 1st down about 150 million bushels from the 973 million bushel figure from a year ago. Talk of improved demand due to the recent price break helped support milling wheat futures in Europe overnight. But, ideas that Russia will not see an extended period of hot and dry weather over the near-term plus talk of higher Russia production has helped keep the market in a long liquidation mode recently. A late recovery in soybeans yesterday helped to support a recovery bounce off of the lows in wheat, but the market still closed moderately lower on the session. Talk that Russia grain production could be around 85 million tonnes this year, up from 61 million last year, helped to pressure the market. Drier weather for the northern plains and good harvest weather for the central plains were seen as negative forces. Weekly export inspections, released during the session yesterday, came in at 20.61 million bushels. This was about as expected and was slightly above the 20.02 million bushels neeeded each week to reach the USDA projection for the 2011/12 marketing year. In addition, the USDA changed the destination for 100,000 tonnes of wheat from "unknown" to Iraq. The COT report released last Friday showed that non-commercial traders shifted from a net long position of 7,261 contract to a net short 14,400 contracts, which means they were net sellers of 21,661 contracts in just one 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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