Pre-Opening Wheat Market Report

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September wheat was up 1 1/2 cents late in the overnight session. Outside market factors shifted from positive to negative in the last few hours. A strong US dollar and weakness in equity markets overnight are seen as negative. Traders are focusing in on the special planted acreage update from the USDA from four key spring wheat producing states plus the spring wheat production forecast for today's Crop Production and Supply/Demand reports. Traders are expecting see US wheat production down about 20 million bushels from 2.106 billion bushels last month. They are also looking for spring wheat production to come in around 541 million bushels, down from 551 projected last month and from 616 million last year. However, world production is expected to be revised higher, which might cause some adjustment lower in US exports as well. Traders are looking for world ending stocks for the 2011/12 season to be adjusted higher by 500,000-600,000 tonnes from the 182.19 million tonnes forecast last month. Better crops from Russia and Europe are expected. As a result, US export usage numbers could be adjusted lower. Even with a lower crop and higher feed usage, traders see ending stocks for the 2011/12 season near last month's estimate of 670 million bushels. While wheat is at a historically low level compared with corn, the USDA seems to have plenty of room on the supply/demand report to boost feed wheat consumption. September wheat closed moderately higher on the session yesterday and back into the recent one-month trading range. Traders see lower yields for spring wheat production in the US and the possibility of reduced planted area showing up in a special acreage review for North and South Dakota, Minnesota and Montana. Saudi Arabia is tendering to buy 660,000 tonnes of hard wheat. French officials raised their production forecast for wheat to 33.3 million tonnes from 32 million last month, as yields were better than feared. Tunisia is tendering to buy 67,000 tonnes of soft wheat. Rains across the southern and eastern plains drought areas were seen as a negative factor for new crop wheat, but traders see the need for heavy rains for several weeks in order to make a dent in the subsoil shortages. Wheat plantings do not begin until September. Japan bought 135,846 tonnes of wheat at their weekly tender. India wheat stocks on August 1st were 35.87 million tonnes, which was far above the target for this time of the year at 17.1 million tonnes. Traders see the need for drier weather in Germany to avoid further quality downgrades.

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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