Pre-Opening Wheat Market Report 20 January
March wheat traded 2 cents higher late in the overnight session. Outside market forces look slightly negative today with strength in the US dollar and weakness in energy and metal markets. The sharp break this week to the lowest level since mid-December combined with improving cash basis levels in Russia, Ukraine, and Europe has many commercial traders seeing the US much more competitive for future export tenders. Talk that soft red wheat is still moving into Mexico as a feed substitute and talk of the record or near record net short position from fund traders which may show up in tonight's weekly COT update are also seen as potential supportive forces. Japan bought 182,275 tonnes of food wheat from the US, Canada and Australia at their regular weekly tender. March wheat saw fairly aggressive buying late in the session yesterday to gain back all of Wednesday's losses and a little more. The weaker US dollar for the third session in a row plus a positive tilt to other commodity markets and ideas that the global economy is improving helped to provide some support for the more active buying. Ideas that the market is oversold and relatively cheap helped to attract some speculative buying. The EU granted export licenses for 175,000 tonnes of wheat this week, which pushed cumulative sales for the 2011/12 season to 7.7 million tonnes as compared with 12.05 million last year. European and US exporters have lost export share to Russia and Ukraine this year. The International Grain Council raised their forecast for global wheat production for the 2011/12 season by 7 million tonnes to 690 million. A strong corn market helped to support the late buying to close near the highs.