Pre-Opening Wheat Market Report for 5/4/2010

July wheat was 4 cents lower overnight. The dollar was higher, trading at the highest level since May, 2009. Deliveries against the May contract totaled 472 contracts this morning with the total for the delivery period so far at 2,590.

Two-sided trade in wheat yesterday included a sharp break that lasted for most of the day session, followed by a late price recovery. Traders said that the selling was triggered by a higher dollar, recent softness in US wheat export sales and a generally weak tone in commodity markets yesterday. The July contract was mixed to slightly lower overnight in conjunction with a new high in the dollar. Despite the recent swings, the July wheat contract has held within the broad trading range seen on April 26th for 6 straight sessions.

Weather is drying out across most of the winter and spring wheat belts. This is expected to remain the case in most areas through the end of the week with the exception of scattered light to moderate showers by tomorrow in the Dakotas, the extreme northern tier of soft red states and parts of Indiana and Ohio. While the drier weather in the US is welcome, dry weather in Western Australia may hurt yield prospects there for the 2010/11 crop. However, the planting season has just started in Australia and it runs through the end of July. Recent warm weather in Ukraine and Russia has advanced the greening process for winter wheat, but a late frost in Ukraine may have caused some damage.

In the US, spring wheat planting progress is well advanced. The USDA pegged planting at 60% complete as of Sunday, compared to 43% last week and just 22% last year. The 10 year average for this time of year is 48%. The winter wheat crop was rated at 68% good/excellent. This is down 1% from last week’s already high rating and it compares to 47% good/excellent last year. The 10 year average for this time of year is 49%. The highest percent rated good/excellent was 78% in 1993. This week’s export inspections for wheat were 17.597 million bushels yesterday versus the 19.346 million needed each week to reach the USDA’s export projection. There have been no official results yet from the widely-followed spring wheat tour in Kansas, but traders are expecting high yield forecasts.