Pre-Opening Wheat Market Report

March wheat was up 10 1/4 cents late in the overnight session. Outside market forces look slightly positive this morning with a weaker tone to the US dollar and quiet trade for financial markets. The market closed weak for four sessions in a row last week, but ideas that the US ending stocks are drifting lower and that global livestock feeding of wheat is on the rise is helping to bring a positive expectation for the USDA reports on Thursday. Wheat ending stocks were seen as burdensome in recent reports, but the trend for lower stocks is seen as a factor that could support further short covering. The Commitments of Traders reports as of January 3rd showed non-commercial traders were net short 39,565 contracts, a decrease of 4,591 contracts for the week. The short-covering trend is seen as a short-term positive force. Commodity index traders held a net long position of 183,985 contracts, down 2,323 contracts for the week. South Korea bought 55,000 tonnes of optional origin feedwheat overnight. Taiwan bought 84,650 tonnes of US wheat. India wheat stocks as of January 1st were estimated at 25.7 million tonnes, which was still sharply higher than the target. March wheat closed 4 1/2 cents lower on the session Friday, and this left the market down 28 cents for the week. The market saw an early bounce, led by strength in the other grains. However, a jump in the US dollar and weak export news helped to spark a setback and a move to lower on the day. Weekly export sales, in the report released before the open on Friday, came in well below trade expectations at 138,600 metric tonnes for the current marketing year and 29,500 for the next marketing year for a total of 168,100. Cumulative wheat sales stand at 77.9% of the USDA forecast for 2011/12 (current) marketing year versus a 5 year average of 74.6%. Sales of 252,000 metric tonnes are needed each week to reach the USDA forecast. Egypt bought 240,000 tonnes of wheat with 60,000 from Ukraine, 60,000 from Russia or Kazakhstan and 120,000 tonnes of French wheat. The lack of US wheat was seen as a negative force. Tunisia bought 50,000 tonnes of optional origin milling wheat. Traders expect total winter wheat planted acreage for 2012 to increase by about 300,000 acres from last year (last year was 40.646 million), led by a significant jump in hard red winter wheat and smaller acreage for soft red. Ending stocks for the 2011/12 season are expected to be revised down by about 35 million bushels, compared with 878 million in the last supply/demand update.

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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