Pre-Opening Wheat Market Report for 8/5/2010
December wheat was 60 cents higher at limit up overnight. The dollar mixed to lower overnight. Wheat posted its biggest gains of the rally to date during the overnight session, pushing the December contract past the $8 market for the first time since September, 2008. Traders said that this comes as a variety of market participants scramble to adjust to production losses in Europe, the Black Sea region and Canada. News that Russia banned wheat and grain exports helped to drive the market sharply higher. Rumors that this would occur helped support the market to solid gains and the announcement by Putin sparked aggressive buying late in the overnight session. Importers and end users have stepped up their buying this week according to traders who note that this has turned into a scramble today. Funds and other specs are also continuing to buy or cover shorts according to one analyst. The USDA will issue its weekly export sales report this morning. This will cover the week ending July 29th when the December contract first pushed past 660. Last week’s export sales were very strong at almost 920,000 versus the average of 419,600 tonnes that is needed each week to reach the USDA’s current export projection. Traders are expecting the USDA to increase its export projection from its current level of 1.0 billion bushels on next week’s supply and demand report. Importers appear to be stepping up buying in wheat as they adjust to dislocations caused by the ongoing drought and heat wave in Russia. Egypt bought 100,000 tonnes of Russian wheat yesterday on its tender for 60,000 tonnes. Tunisia bought 50,000 tonnes from optional origins with offers from the US, France and Germany. Jordan bought 50,000 tonnes of Black Sea origin wheat. Both the Egyptian and Jordanian purchases are for delivery in early September. Jordan is also tendering for another 100,000 tonnes of hard wheat. Japan bought 124,469 tonnes of wheat on its regular weekly tender. Bulgaria reports that its wheat harvest is 90% complete with the harvested total at 3.4 million tonnes. They recently pegged this year’s wheat crop at a reduced 3.5 million tonnes versus 4.0 million last year.