Pre-Opening Wheat Market Report for 6/2/2010

July wheat was 1/2 cent higher overnight. The dollar index was moderately higher.

The wheat market gained some downside momentum yesterday with another push into new contract lows in July wheat followed by a new low close in that contract. This comes as the dollar index remains near its recent highs, which is adding to the longer term pressure according to traders.

The USDA released its latest Crop Progress report yesterday and it showed the winter wheat crop in generally good to excellent condition. Spring wheat is 95% planted compared to 91% last week and 87% last year. The 10 year average for this time of year is 93%. This ties with the previous highest for planting progress at 95% set in 2004. The spring wheat crop is rated at 85% good/excellent, unchanged from last week, and up from 73% last year. The 10 year average for this time of year is 69%. The highest percent rated good/excellent was 88% in 1991.

The weekly Winter Wheat Conditions report showed 65% was rated good/excellent compared to 66% last week and 45% last year. Current conditions are well above the 10 year average for this time of year at 44%. However, another round of unwelcome rain across much of the soft red wheat belt today may start to bring some deterioration on upcoming report. Conditions in Illinois and Missouri are already lagging the national rating, but Ohio, which has tended to see less heavy rains, is at 76% good/excellent.

The Australian Bureau of Meteorology reported yesterday that conditions in the Pacific still broadly support the development of a La Nina. This weather phenomenon tends to bring beneficial rains to Australia’s wheat growing areas which have benefited from good rains in recent days and weeks. Sources there indicate that moderate rains over the next 10 days would result in near ideal growing conditions. China’s Xin Hua News Agency says that summer grain production should come in near unchanged from last year with wheat coming in slightly above last year. However, Russia reported this week that their total 2010 grain crop may come in at just 90 million tonnes versus a previous forecast of 97 million tonnes. This stems in large part from losses in the winter wheat crop due to poor weather. Winter wheat production in Russia is expected to total 42 million tonnes versus 46 million last year.

This week’s export inspections for wheat were 12.090 million bushels, down from 20.678 million last week. Inspections need to average 28.7 million bushels each week to reach the USDA’s export projection for 2009/10. Argentina’s Ministry of Agriculture said yesterday that it has granted export permits for at least 3 million tonnes of wheat for the 2010/11 crop which is being planted now.