Wheat: Pre-Opening Wheat Market Report

July wheat was up 1 cent late in the overnight session after first trading as much as 14 cents lower. Outside market forces were negative. Deliveries for May wheat were just 7 today from 238 contracts yesterday. The bearish tone for other commodity markets plus talk of better rains for China was enough to drive the market sharply lower in recent days. However, a hot and dry forecast for the southern plains over the next week may be helping to provide some support to the market. Traders see stressful conditions and deteriorating winter wheat crops in the southern plains as a potential positive force. Europe looks to see some rain but still below normal for the next week and Canada still looks too cold and wet to advance plantings. On top of questionable weather, export demand appears to be picking up. July wheat was down sharply yesterday, and the break overnight pushed the market to its lowest level since March 17th. The turn higher in the US dollar and the collapse in the other grains, metals and crude oil helped drive the market sharply lower yesterday. Weekly export sales for wheat came in at 273,900 metric tonnes for the current marketing year and 275,700 for the next marketing year for a total of 549,600, which was well above trade expectations. Cumulative wheat sales stand at 100.7% of the USDA forecast for 2010/11 (current) marketing year versus a 5 year average of 95.9%. With another month left, old crop sales will need to see cancellations of 53,300 tonnes each week to reach the USDA forecast. This opens the door to a revision higher in exports and tighter ending stocks for the old crop in the USDA’s supply/demand update next week. The European Union granted export licenses for 305,000 tonnes this week, bringing total exports for the marketing year to 16.8 million tonnes from 15.0 million last year at this time. France is expected to receive some rain showers over the near term, but French weather officials see the rains offering little relief following one of the hottest and driest Aprils on record. For the March 31st Canadian Grain Stocks report for release today, traders see wheat stocks near 14.9 million tonnes, down 13% from last year and the lowest in three years. The Kansas crop tour sees that state’s production near 256.7 million bushels, the smallest crop since 1996 and down 29% from last year.