Pre-Opening Wheat Market Report for 10/20/2010
Related Keywords: Agriculture Email Print | December wheat was 4 1/4 cents higher overnight. The dollar was lower. December wheat posted a modest recovery overnight following a sharp sell off during the day session yesterday. Yesterday’s selling was credited to a sharp rally in the dollar following China’s decision to raise key interest rates. Funds were substantial sellers in wheat yesterday to lead the market lower and traders saw forecasts for rain in both the soft red and hard red producing areas in the next week as a bearish development. Over the longer term, the wheat market remains in a fairly broad sideways pattern that dates back to about the second week of August. Traders indicate that support on breaks over that stretch has come from a lower dollar along with solid demand in export markets and some dry conditions in the US and Russian winter wheat belts. Pressure has come from adequate world supplies and improved growing conditions in Argentina and, to a lesser extent, for winter wheat in Russia in September and early October. Traders indicate that this morning’s support is coming from a lower dollar along with belated support from yesterday’s larger than expected wheat purchase by Egypt. Egypt bought a total of 290,000 tonnes on a tender that was announced on Monday. They bought 120,000 tonnes from France, 110,000 tonnes from the US and 60,000 tonnes from Canada. This is for delivery in late December. Egypt’s purchases for the current fiscal year starting on July 1st total 2.86 million tonnes from the US, France and Canada. They had bought 5.53 million tonnes during the prior fiscal year from those countries plus Black Sea suppliers. The USDA reported new sales transactions totaling 220,000 tonnes of US wheat yesterday. Traders expect Australian wheat stocks as of the end of their marketing year on September 30th to be up near 26% from last year, but down from earlier forecasts. Weather remains mostly dry in hard and soft red winter wheat areas of the US, although some forecasts call for substantial totals to start developing in the southern Plains late in the week.