May wheat was up 5 1/2 cents late in the overnight session. Outside market forces look positive today with a weak tone to the US dollar and strength in metals and energy markets. The most recent weather forecasts have shown increased chances of rain for the dry areas of the southern plains, and traders are likely to monitor these reports for any changes over the next few days. Europe is expected to remain dry over the near term, and there are also some concerns for dryness in China’s growing areas. Traders see the sharp setback in wheat prices as a reason to expect improved feeding demand. May wheat briefly traded at the same price as May corn yesterday, which might have been the first occurrence of that since 1996. July wheat traded as much as 48 1/2 cents lower on the session early yesterday. It closed sharply lower on the day but up about 10 cents up from the early lows. Commodity markets experienced aggressive fund trader selling across the board, and wheat was no exception. A major investment bank initiated a “take profits in commodities” recommendation, and that was enough to spark the selling, as the market pushed down to its lowest level since April 1st. Concerns over the potential for a significant slowdown in the Japanese economy if the nuclear issues are not resolved soon and by news that radiation levels are increasing helped to pressure the market. Mixed views on the rain outlook for the southern and western plains added to the volatility in wheat, and with crops under stress, a soaking rain is badly needed. There is talk that some land in Texas is switching to cotton from winter wheat. Traders are also concerned about dry weather in China, Europe and Australia, as well as an outlook for a wet and cold spring in the Canadian Prairies. Kansas crops are rated just 28% good to excellent versus 69% last year, while Oklahoma is just 11% compated to 71% last year and the worst ever at 10% in 1996. A record crop harvest and already high storage stocks have traders believing that India will be an exporter of wheat this year. Increased talk that Russian and Black Sea producers will be exporting wheat this fall or even sooner added to the negative tone yesterday. Japan is tendering to buy 147,712 tonnes in their regular tender, and Syria is tendering to buy 27,000 tonnes. Jordon is tendering to buy 100,000 tonnes, and Iraq is tendering to buy 100,000 tonnes from any origin.

Bron: CME