Pre-Opening Wheat Market Report for 4/26/2010

July wheat was 7 cents higher overnight session. The dollar was moderately higher.

The wheat market saw a steady march higher last week and this was followed by strong gains overnight that took the July contract to the highest level since March 5th. The overnight gain was considered particularly positive since it came in the face of a moderately higher dollar.

Conditions remain very good across the hard and soft red winter wheat belts with recent rains well absorbed in most areas. Heavier totals in SE Iowa and northern Missouri over the weekend may take conditions to an overly moist level in a few areas and forecasts of heavier rains across the central Midwest and mid south later this week could again raise some quality concerns according to one analyst. However, this afternoon’s crop report from the USDA is expected to show that a big majority of the hard and soft red winter wheat crops remain in good-to-excellent condition. Conditions in spring wheat growing areas of the northern Plains in the US and the Canadian prairies to the north are also favorable with early field work underway as weather permits. Some dry weather would be considered beneficial.

The Commitments of Traders report for the week ending April 20th showed net buying by funds in wheat. Trend-followers were net buyers of 8,329 contracts to decrease their net short position to 61,517. This is still the largest net short position held by trend-followers in any agricultural commodity market, and some traders believe that these traders will remain under ongoing pressure to cover even more of their short position. Traders report that Jordan is tendering to buy 100,000 tonnes of optional origin hard wheat. US wheat export sales have lagged on the last two sales reports from the USDA. This came at a time when the wheat market was just starting to rally and further price gains last week may further reduce the competitiveness of US wheat in the Mid East and North Africa.

Canadian producers plan to plant 23.2 million acres to wheat this year which was below expectations and compared with 24.5 million planted in 2009.