Pre-Opening Wheat Market Report for 6/14/2010

December wheat was 5 1/4 cents higher overnight. The dollar index was sharply lower.

Wheat got a boost from a lower dollar overnight amid signs that trend-following funds may be interested in starting to cover part of their large net short position. A substantial loss in planted area in Canada is also said to be adding to support.

Ample world supplies, a lower Euro and the advancing US winter wheat harvest have been the major negative price factors in recent weeks according to traders with the longer term losses in the Euro having the effect of directly boosting European export prospects at the expense of US exports.

Weather in the US has been wet over the past week, with very heavy rain totals in Nebraska, SE North Dakota and parts of Kansas and the Oklahoma Panhandle with moderate to heavy amounts in western and southern Iowa and parts of Missouri. This rain is considered unwelcome in nearly every area since the crop that is still developing is already well supplied with moisture, and rain may hamper harvest progress in areas where the crop is already finished. Prolonged wetness also increases worries over diseases that could potentially lower yields and reduce quality/protein in some winter wheat areas that have yet to be harvested.

The Commitments of Traders report for the week ending June 8th showed mixed activity by funds. Trend-following funds were net buyers of 2,415 contracts to decrease their net short position to 65,450. Index funds were net sellers of 8,007 contracts. Non-Commercial traders were net short 44,661 contracts, a decrease of 1,790 contracts. The Commercial traders were net long 63,590 contracts, a decrease of 1,354 contracts.

On Friday, the market saw selling pressure early but the news from Canada and fund short-covering supported market later in the session. The short-covering pushed the July contract to higher on the week. Current radar shows mostly moderate rains moving from Kansas through much of Iowa and Missouri and into NW Illinois. Another system of moderate to heavy rains is expected from Oklahoma through NW Arkansas and into parts of Missouri and Illinois into tomorrow, although coverage may not be widespread. A push of hot and humid air is expected by Friday into Oklahoma, Arkansas, Missouri, Illinois, Indiana and SE Iowa.

The Canadian Prairies were mainly dry on Saturday and Sunday which was very welcome.