Pre-Opening Wheat Market Report for 3/24/2010

May wheat was 2 3/4 cents lower overnight. The dollar index moved sharply higher overnight.

Yesterday’s selling spilled over into the overnight session, spurred on by a sharp run up in the dollar according to traders. This took the May contract below the March lows overnight to the lowest price level seen since early October.

Yesterday’s selling came on an improved weather outlook this week and into next week which in turn improves the outlook for planting of spring wheat. It also increases the potential for drying in soil moisture levels in winter wheat growing areas in coming weeks. This is also considered positive since the previous weather outlook suggested continued very wet conditions into April. Given the current high levels of soil moisture in many hard and soft red winter wheat growing areas, the wetter outlook had raised the threat of crop diseases this spring. A forecast of warmer temperatures across the central US next week adds to the positive shift in the weather outlook.

Ukraine’s grain exports from July 1st through March 18th were about the same as the previous year at 17.44 million tonnes. India is expected to export a record 2.7 million tonnes of basmati rice in the current financial year. This runs somewhat counter to the recent trend toward maintaining food export curbs in wheat and building basic grain stocks due to rising food inflation in India. The expected arrival of a bumper Indian wheat harvest in coming weeks is expected to cause some tightness in storage, but analysts are not sure that this will ease food inflation since the government will buy and store much of the incoming crop. In addition, expectations of continued inflation could cause merchants and end users to also build and hold larger inventories.

Vietnam has asked its Food Association to buy an additional 500,000 tonnes of domestic rice in addition to the 1.0 million tonnes of purchases that were previously called for.