Pre-Opening Wheat Market Report for 9/29/2010
Related Keywords: Agriculture Email Print | December wheat was 19 3/4 cents lower overnight. The dollar was lower. December wheat continued its 3-day retreat with another sharp loss overnight. The downturn has featured selling by funds amid a more favorable outlook for winter wheat plantings in the US and Russia and a generally favorable outlook for developing crops in the Southern Hemisphere. Overnight action took the December contract below its August lows to its lowest level since July 30th. Trend-following funds pushed back to a net short position as of the latest weekly COT report and one analyst pointed out that they have been willing to hold much larger net short positions in wheat than in recent years. This brings fears of more selling. The analyst also noted that India is sitting on a large exportable surplus of wheat, but that a fear of food inflation has kept them from lifting their long-standing ban on wheat and rice exports. He noted that lower prices may be more likely to trigger Indian wheat exports than higher prices, since the country is more concerned about the danger of food inflation than it is about increasing its export revenue at higher prices. Sources in Australia are expressing some concern that the La Nina rain pattern may persist into 2011 and that this could disrupt harvest with wet weather in the NE. There have also been official predictions since the start of the year of the worst locust plague in 75 years in eastern Australia. However, for the time being, conditions in the east are extremely favorable. In the US, soil moisture levels have improved in both hard and soft red winter wheat areas most recently in Ohio, which is the biggest soft red winter wheat producing state. The USDA will issue its quarterly Grain Stocks report and its small grains summary on Thursday. Traders are looking for a slight downward adjustment in the US all-wheat crop for 2010/11 from 2.265 billion bushels in August.