Pre-Opening Wheat Market Report for 10/12/2010
Related Keywords: Agriculture Email Print | December wheat was 4 3/4 cents lower overnight. The dollar firmed overnight. Wheat sold off yesterday in the face of substantial gains by corn and soybeans and the December wheat contract edged lower again overnight. One analyst noted that this underscores wheat’s role as a follower on the current rally, and that in turn suggests that the market remains fully adjusted to this summer’s loss of Black Sea wheat after the Russian drought. Forecasts in the US call for continued mostly dry conditions across the soft red winter wheat belt in the Midwest along with some increasing dryness in the Great Plains hard red winter wheat belt. Traders indicate that fund traders moved back to the sidelines or even the sell side yesterday following big buying by funds in wheat on Friday. Trend-following (managed) funds big net short position in wheat was the largest such position in any agricultural commodity market as of the most recent Commitments of Traders report. Traders will be looking closely at export sales and the tender calendar over the short term. If importers and other end users are stepping up their buying, it may be difficult for the trend-following funds to maintain their net short position. Traders will also be looking at US weather forecasts which call for only scattered light rains this week in the Midwest, with slightly better amounts and wider coverage possible in eastern Ohio. The USDA will issue its Export Inspections and Crop Progress reports today. Traders indicate that dryness in the Midwest soft red winter wheat belt is a growing concern, but analysts indicate that there is still time for moisture to improve ahead of winter dormancy. China has announced that it will raise its minimum purchase prices for wheat in 2011. Egypt’s GASC buying agency is looking to buy 55,000 to 60,000 tonne cargoes of hard wheat from the US, Canada or Australia. Results on the tender expected today, and shipment is due in mid December. Customs data indicate that France exported 1.3 million tonnes of soft wheat in August, bringing the total for the first two month’s of the marketing year to 2.7 million tonnes. Algeria, the world’s 5th largest wheat importer has imposed a $200 per tonne import duty on durum wheat in an attempt to reduce imports and increase consumption of the country’s stocks of domestically-grown durum wheat. The fee will be imposed retroactively back to August 1st. Ukraine’s Economic Ministry is proposing export quotas of 2.7 million tonnes for grain for this year. Of that total, 500,000 tonnes would be wheat. This is in line with previous ideas.