Pre-Opening Wheat Market Report for 8/11/2010
December wheat was 2 1/4 cents higher overnight. The dollar was substantially higher. Wheat has generally traded in narrower ranges this week after last week’s surge to the recent highs for the move. Traders indicate that the scramble to replace lost Black Sea supplies is becoming more subdued as the week wears on with a number of governments trying to assure the markets and their own populations that supplies are adequate for the time being. Algeria joined this list yesterday, although it is tendering for wheat today and US Agriculture Secretary Vilsack also commented yesterday that US and world supplies are adequate to replace the lost demand from Russia. Sources in the Black Sea region suggest that Russia may pressure the region’s other exporters to institute a ban on grain exports. This would be aimed primarily at neighboring Kazakhstan, although officials in both countries are not confirming these reports. The International Grains Council expects Kazakhstan to export 7.8 million tonnes of wheat this year, making it the world’s 6th largest wheat exporter. Nearby September and December wheat continued to move lower yesterday. Traders will be focusing on the USDA’s production estimate for Russia for the report tomorrow, but there is still a great deal of uncertainty over how big the losses there are, with some forecasts calling for the drought to last another week or longer. The latest a grain forecasts from Russian officials are between 60 and 65 million tonnes. Analysts expect the USDA to increase its US all-wheat production estimate tomorrow by about 15 million bushels from 2.216 billion on its July report. This is due improved conditions for spring and durum wheat. Egypt is in the market for 55,000 to 60,000 tonnes of optional origin wheat, although its GASC buying agency said that it is not seeking bids from Russia, Ukraine, Kazakhstan or Romania. The USDA announced a sale of 120,000 tonnes of wheat to Egypt yesterday. Lebanon is tendering for 50,000 tonnes of wheat and Algeria is tendering for at least 50,000 tonnes. Exporters in Turkey are said to have cancelled sales of wheat flour to Indonesia where officials say that they have needs covered through the end of September. Romania pegged its 2010/11 wheat crop at 5.7 million tonnes, up from 5.2 million in 2009/10.