Pre-Opening Wheat Market Report for 4/6/2010

May wheat was 1 1/4 cents lower overnight. The dollar index was higher.

The wheat market sold off to new contract lows in the May and July contracts yesterday before recovering to near unchanged going into the close. Traders said that the generally good crop conditions in the US are weighing on the market along with a modest recovery in the dollar since late last week.

The USDA issued its first system-wide Crop Progress report for wheat yesterday and it showed 65% was rated good/excellent compared to a 10-year average of 50%. Only 6% of the crop is rated poor to very poor as compared with 19% as the 10-year average. The Kansas crop is rated 69% in good to excellent condition as compared with 47% as the 10-year average and Kansas is the largest hard red winter wheat state. Also, the jointing progress in Kansas is behind last year and the 5-year average. Conditions are better than average in the big soft red winter wheat state of Ohio at 76% good to excellent. The highest percent rated good-to-excellent for the winter wheat crop overall was 78% in 1993 while the lowest was 31% in 2002.

This week’s export inspections for wheat were 20.1 million bushels, up from last week’s 14.8 million. Cumulative inspections were 85.9% of the USDA’s export projection for 2009/10 versus a 5-year average of 82.9%. Inspections need to average 13.4 million bushels each week to reach the USDA’s export forecast. Wet weather is expected across most of the soft red wheat belt today and into Thursday. Traders indicate that while these rains are unlikely to cause direct harm to the developing crop, excessive moisture and warmer than normal temperatures could set the stage for increase plant diseases later this spring.

Tunisia bought 25,000 tonnes of soft wheat for June-July shipment. Sources in the Middle East said today that Iraq has bought 500,000 tonnes of Russian, Canadian and US wheat. Japan is in the market for 157,000 tonnes this week on its regular weekly tender.

The daily commentaries provide a recap of each commodity’s traded price activity, an analysis of the factors that influenced price activity, a recap of any reports released that day, and a look ahead at the next day’s schedule. CME Group provides market commentaries for corn, wheat, soybeans, gold and silver.