Pre-Opening Wheat Market Report for 3/18/2010

May wheat was 7 1/2 cents lower overnight. The dollar firmed overnight after making a new low for the month of March yesterday.

The wheat market appears to be tracking the dollar and other outside markets fairly closely this week. This continues against a backdrop of steady to firm export sales and wet conditions in the spring wheat belt and along the northern fringes of the soft and hard red winter wheat belts.

Traders indicate that this is still mostly favorable for the winter wheat crop, especially with the drier and warmer conditions that have been experienced this week. However, a colder weather system is expected this weekend and that may raise concern over the potential for a freezing and thawing cycle given the ample soil moisture levels, especially in northern areas. That cycle could potentially damage parts of the winter wheat crop, but one analyst points out that such concerns are premature for now.

Traders credited the strength to fund buying and short covering in conjunction with a positive set up in outside markets. Traders reported yesterday that Algeria bought 300,000 tonnes of milling quality wheat for delivery during the second half of May and into June. Origin was said to be optional. Floods in Minnesota and eastern North Dakota are keeping weather in the mix of price factors this week, but traders and analysts indicate that it is still too early to be concerned about spring wheat planting delays.

A state official in New South Wales, Australia said yesterday that drought conditions there have fallen to the lowest level in four years. The amount of the state that is in drought is normally 30% at this time of year. This comes amid reports that the El Nino effect continues to weaken in the Pacific which would tend to increase the potential for moisture during the growing season.

The UK reports that January wheat exports were 210,782 tonnes, down substantially from the previous January when exports totaled 352,822 tonnes. A government official in India said yesterday that the country will not lift a ban on wheat exports as has been widely anticipated. He said that the government would reconsider the matter in June. Tunisia has announced a tender for 75,000 tonnes of soft milling wheat for delivery in late May through early July.