Pre-Opening Wheat Market Report for 7/13/2010

December wheat was 1 1/2 cents lower overnight. The dollar was lower. Deliveries against the July contract were 833 contracts, bringing the total for the delivery period so far to 14,445.

December wheat closed lower for the second day in a row yesterday after previously closing higher for 6 straight days, and that may put buyers on the defensive. The fund buying that had been seen on the rally was not in evidence yesterday, and the market saw further minor losses overnight.

The USDA’s weekly Crop Progress report shows the winter wheat harvest at 63% complete with the soft red winter harvest generally well over 90% complete. The 10 year harvested average for all winter wheat is 69%. The spring wheat crop is rated at 83% good-to-excellent, unchanged from last week. Last year’s crop was at 71% good-to-excellent at this point, and the 10-year average for this time of year is 65%.

Trade sources in Morocco indicate that their country may need to import 2.2 to 2.4 million tonnes of soft wheat in the coming year. This year’s crop is projected at 8 million tonnes, down from 10.2 million last year. France’s farm office FranceAgriMer said today that this year’s soft wheat crop is likely to be down 3.5% from last year at 36.5 million tonnes. This downgrade follows a spell of very hot weather and a late spring and early summer and it was expected.

Monsoon rains have improved in India over the past week, but they remained at a 10% deficit versus normal. That deficit has narrowed from 16% for the month of June. Government officials continue to call for a resumption of normal rains by the end of July. India’s summer rice planting through July 9th is up 5.4% from last year at 7.23 million hectares.

Ukraine reports that its grain harvest through July 9th is lagging slightly behind last year. Harvest is complete on 1.651 million hectares out of a total of 12.056 million according to the agriculture ministry. This week’s US export inspections for wheat were 14.129 million bushels, down from 16.883 million last week. Inspections need to average 19.528 million each week to reach the USDA’s export projection for the 2010/11 crop marketing year.

In yesterday’s action, December wheat traded on both sides of the previous day’s close throughout the overnight and day sessions before finishing near the lows of the day. The December contract traded inside the previous day’s range for the second day in a row yesterday, but it broke below the Monday and Friday lows overnight. Weather forecasts look mostly favorable for the tail end of the winter wheat harvest, and forecasts also continue to be favorable for spring wheat with next week’s very hot temperatures expected to stay mainly south of the spring wheat belt in the Dakotas.