Wheat: Pre-Opening Wheat Market Report

July wheat was down 16 3/4 cents late in the overnight session. Outside market forces look mostly positive with a weaker tone for the US dollar and firm energy and equity markets, but traders are concerned with US and China monetary policy moves, and this has kept fund traders on edge. With some rain and cooler weather for drier parts of Kansas and Oklahoma for the short-term, speculative long liquidation selling has been active. This helped drive the market lower overnight and yesterday. European wheat futures are down today, as there are better chances for some rain for Germany and Poland for the next week. There is also talk of better rain next week for China. China’s wheat areas have turned hotter into a more sensitive time, so the rains next week will be welcome and badly needed. Traders will begin monitoring Canadian weather a little closer as more cold and some wet weather in the near-term should keep progress slow. Canadian producers intend to plant 24.724 million acres, which would be up 17.4% from last year and up from trade expectations near 23.5 million. The market pushed sharply lower on the session yesterday with talk of better weather for the hard red winter wheat crop and profit-taking helping to pressure. Mid-day weather models confirmed some additional rain totals for the central and southern plains for the today and tomorrow, which is expected to ease some of the stress. Ideas that interest rates in China might be adjusted higher again on the weekend to slow inflation helped pressure. July Minneapolis wheat was up 7 1/2 cents into the mid-session and pushed to its highest level since Mid-February before the moderately lower close. Concerns for the slow start to the planting season helped to support the early strength. The weekly update showed that just 6% of the crop has been planted compared to 39% last year. July KC wheat was up 5 3/4 cents into the mid-session to move to its highest level since February 15th before closing moderately lower on improving weather prospects. The early rally was supported by deteriorating crop conditions. The weekly winter wheat conditions report showed 35% of the crop was rated good/excellent compared to 36% last week and 69% last year. Crops rated poor to very poor reached 40% from 6% last year. The Oklahoma crop is rated just 5% good to excellent from 75% last year, and Kansas just 23% from 73% last year. There were indications from Morocco that they are done with imports this season and will shift to their own wheat crop for needs. Demand seems to be picking up with Iraq buying 300,000 tonnes this week, Saudi Arabia buying 275,000 tonnes, Jordon tendering for 100,000 tonnes, Syria tendering for 27,000 tonnes and Bahrain in for 30,000 tonnes.