Pre-Opening Wheat Market Report for 7/20/2010

December wheat was 5 1/2 cents lower overnight. The dollar moved moderately higher this morning.

Wheat traded lower overnight in conjunction with a higher dollar and lower corn and soybean markets. This follows yesterday’s action in which wheat pushed to near a new 6-month high early before selling off.

Wheat has maintained most of its recent gains versus corn with traders citing improved demand and diminished harvest pressure as the hard red winter wheat harvest slowed last week, mainly due to rains in Nebraska. The overall winter wheat harvest stands at 71% complete compared to 63% last week and a 10-year average of 77%. The white winter harvest is also lagging somewhat in the Pacific Northwest.

The spring wheat crop remains in very good condition with 82% was rated good/excellent compared to 83% last week and 73% last year. The 10 year average for this time of year is 62%. This is near the previous highest good/excellent rating of 83% which came in 1993. Temperatures in the northern Plains of the US remain moderate to warm with more of the same expected into the weekend.

Farther north in the Canadian Prairies, temperatures remain on the cool side with soil moisture levels still running adequate to surplus. Some analysts cite a need for warmer weather combined with dry conditions in Canada to prevent an increased incidence of plant disease in coming weeks.

India is reporting substantial improvement in planting progress for summer crops despite the continue lag in monsoon rains in some areas this week. Last week’s monsoons were 24% below average. The government there plans to release 2.5 to 3.0 million tonnes of wheat and rice to its states due to the overall positive outlook for planting.

This week’s export inspections for wheat were 22.4 million bushels, up sharply from last week’s 14.3 million. Inspections need to average 19.4 million bushels each week to reach the USDA’s export projection for 2010/11. Japan is in the market for 142,719 tonnes of US food wheat.