Pre-Opening Wheat Market Report 23 september
December wheat was up 1 1/2 cents late in the overnight session but traded as much as 15 3/4 cents higher before outside forces turned weak again. Outside market factors shifted from neutral to negative late in the session, with more weakness in metal and energy markets and a sell-off in the stock market. Weakness in outside markets and the steep sell-off in corn and soybeans has helped keep the market in a steep downtrend. A spring wheat production report will be released next Friday, and traders are looking for adjustments lower in production due to lower yields and a possibe adjustment lower in harvested acreage. For the October 12th Supply/Demand report, traders are anticipating a significant adjustment higher in feed demand for wheat. The USDA current estimate for wheat feeding is only 240 million bushels, but there have been five years since 1990 when wheat feeding was above 300 million, with two years above 375 million bushels. With wheat trading at a discount to corn, it would not be surprising to see stronger feed wheat usage. Export demand remains slow, as producers in the Black Sea region are expected to export 33.2 million tonnes this season, up from 14.39 million tonnes last year. The surge in exports from this region means sharply lower exports from Europe, US, Australia and others. Rains are clearing out of Oklahoma this week, and the forecast for the southern plains looks dry. December wheat collapsed to trade down to 14 month lows yesterday, as traders sew weaker global demand and there was heavy liquidation of speculative longs out of riskier asset classes like commodities. A surge in the US dollar plus a massive sell-off in commodities and equities sparked selling in wheat that drove it to its lowest level since July 2010. Weekly export sales, released before the open yesterday came in at 679,500 metric tonnes, which was much higher than expected. Cumulative sales stand at 49.5% of the USDA forecast for 2011/12 (current) marketing year versus a 5 year average of 49.8%. Sales of 379,000 metric tonnes are needed each week to reach the USDA forecast. Egypt bought 240,000 tonnes of wheat from Russia in their tender. Argentine officials are forecasting their 2011/12 wheat crop at 11-13 million tonnes, down from 14.7 million in 2010/11. While planted area was up 2.9% from last year, dry and windy weather has lowered yield expectations. The International Grain Council raised its world production forecast by 2 million tonnes to 679 million tonnes. Taiwan is tendering to buy 52,920 tonnes of US wheat.