Pre-Opening Wheat Market Report for 8/20/2010
December wheat was 1/4 cent lower overnight. The dollar was substantially higher overnight, pushing to near last week’s highs in the process. The wheat market found renewed support yesterday as fallout from the Russian drought continues to boost activity in the world wheat market and divert heavier than expected demand to the US. This has included ideas that Russia will be forced to import about 4 million tonnes of grain in 2010/11. Much of this is expected to come from what Russians call ‘the near-abroad’ with Kazakhstan providing wheat and Ukraine providing some feed grains, However, additional amounts of feed grains and wheat may also come from the EU and the US. Scattered rains and more moderate temperatures have brought some relief to the drought in Russia and forecasts call for more rains in the August 20-22nd timeframe, although even more rains will be needed to provide favorable conditions for planting of winter wheat. Russia was the world’s third-largest wheat exporter last year. India’s farm minister said yesterday that his country’s ban on exports of wheat and non-basmati rice will stay in effect for now as the government moves toward a new food security law. This comes as neighboring Bangladesh is looking for sources of wheat and rice at below market prices. Poor countries such as Bangladesh find themselves at a disadvantage as wealthier importers continue to scramble to replace lost Black Sea supplies of wheat. India did permit exports of par-boiled rice and wheat to Bangladesh 3 months ago in an exception to its ban, but the grain has not yet been shipped. The UN food agency FAO said yesterday that it expects to cut its forecast of the world wheat by 5-7 million tonnes from its previous forecast. This week’s export sales in wheat came in at a whopping 1,412,500 tonnes, all for the current marketing year, up from last week’s very strong total of 1,329,700. Egypt was the biggest buyer on the report at 594,000 tonnes followed by Canada and Mexico. Sales need to average 494,000 tonnes each week to reach the USDA forecast. Traders also reported yesterday that Egypt bought 240,000 tonnes of wheat from Canada and France. Bangladesh is re-tendering for 50,000 tonnes of wheat. Statistics Canada will issue wheat and other grain production estimates this morning