Pre-Opening Wheat Market Report for 4/9/2010

July wheat was 2 3/4 cents higher overnight. The dollar index was lower overnight.

The wheat market maintained most of Wednesday’s gains during yesterday’s sell off despite a generally weak tone in the commodity market sector. Traders indicate that fund buying and short covering by other specs has been the key factor in this week’s advance with many traders eying the record large net short position held by trend-followers as of the latest Commitments of Traders report.

Exports remain on the positive side, and the latest total released yesterday was above trade expectations and above the weekly average needed to reach the USDA’s export projection for 2009/10. Traders said that cold temperatures in the SW hard red wheat belt overnight Wednesday and into Thursday may have done some minor damage. This may have added to support on yesterday’s break along with a firming in European markets due to a softer Euro.

The USDA also announced a sale of 126,000 tonnes of US wheat to an unknown destination for the 2010/11 crop marketing year yesterday. The sale included a mix of hard and soft red winter wheat as well as hard red spring wheat. This week’s export sales in wheat 323,700 tonnes for the current marketing year and 209,700 for next year for a total of 533,400. Sales need to average 117,000 tonnes each week to reach the USDA forecast for the 2009/10 crop marketing year which ends on June 30th.

Russian officials said yesterday that Columbia wants to import more than 250,000 tonnes of Russian wheat. They added that Russia may be willing to exchange wheat for Columbian raw sugar. This is the latest indication that Russia is expanding into traditional American wheat import markets in the Western Hemisphere. They are also expanding their reach into the Far East which is giving them a truly global reach in terms of wheat exports for the first time since the end of the Soviet era.

Thailand bought 45,000 tonnes of US wheat with delivery slated for the May-June period. An official in Morocco has indicated that cereal production there has been reduced by dry weather during the growing season which was followed by flooding. This is expected to result in imports of 4 to 4.5 million tonnes of soft and hard wheat.