Pre-Opening Wheat Market Report for 5/28/2010

July wheat was 1 1/2 cents higher overnight. The dollar index was mixed overnight, and lower into this morning.

Traders indicate that a lower dollar brought some late, moderate support to the wheat market late in the overnight session. This comes as many traders are already evening up ahead of the long holiday weekend. Yesterday’s Export Sales report from the USDA again showed soft demand for the remainder of the old crop season although combined old and new crop sales were above trade expectations. Net sales for wheat came in at 148,800 tonnes for the current marketing year and 336,700 for next year for a total of 485,500. Old crop sales need to average 510,000 tonnes each week to reach the USDA forecast, and this week’s total was only 29% of the average needed.

Weather forecasts remain mostly warm and dry for winter wheat areas in the US with scattered, mostly light showers more prevalent in the soft red wheat belt over the next few days, and moderate to locally heavy rains in the central Plains into Sunday. Some forecasters are now indicating that the very hot weather that had been forecast for the southern and south central Plains may stay confined to the far SW. This would result in more favorable conditions for the developing crop than previously forecast.

The EU cleared 484,000 tonnes of wheat exports for the current week bringing the total for the marketing year to-day to 16.1 million tonnes vs. 20.1 million tonnes last year by this date. Egypt’s state buying agency – GASC – announced yesterday that it is looking to buy up to 120,000 tonnes of wheat. They are looking for 60,000 tonnes from Australia, Europe or the Black Sea Region. The remaining 55,000 to 60,000 tonnes could be US soft red, soft white or hard red wheat, or it could be Canadian wheat. If GASC does indeed buy wheat from the US, this would be a departure from recent tenders that have included mostly Black Sea and European wheat. Japan bought 131,000 tonnes of wheat yesterday on its regular weekly tender.

Wheat traded higher yesterday with support coming from a sharply lower dollar. This triggered moderate buying by funds and by spreaders versus corn.