Pre-Opening Wheat Market Report for 3/16/2010

May wheat was 1 1/2 cents lower overnight. The dollar saw 2-sided action overnight with a late sell off to moderately lower levels.

The wheat market has traded in a very narrow range in recent days, much as has been the case in old crop corn. The only difference between wheat and corn is that wheat pushed just below its early February lows prior to staking out its recent trading range, while corn has remained just above its February lows.

This suggests a relative balance in the influence of outside markets and a lack of fresh news and fresh selling in the cash grain markets since last week’s negative USDA supply and demand report. Wheat was the weakest grain market yesterday, losing to corn amid consistent, moderate selling by funds.

Traders said that a rally in the dollar during the overnight session and into the day session yesterday was the main negative price factor. Overnight, a lower dollar provided support.

This week’s export inspections in wheat were just 9.167 million bushels which was well below trade expectations. Cumulative inspections stand at 79.0% of the USDA’s projected total for the 2009/10 marketing year versus a 5-year average of 78.0%. Inspections need to average 14.8 million bushels each week to reach the USDA’s projection.

Drier weather is pushing into the central US this week and that is considered beneficial, although the retreat of the snow cover could leave the winter wheat crop somewhat vulnerable to a freeze later in the month, especially if temperatures are warm over the short term. Japan is looking to buy 136,000 tonnes of wheat on its regular weekly tender. This is down from last week’s total. Feed mixers in South Korea have bought 110,000 of feed wheat from optional origins. In the weekly crop progress reports, Kansas winter wheat conditions are now rated 63% good to excellent as compared with 60% last week and 42% last year at this time. Oklahoma crops are rated 68% good to excellent. Texas conditions are also favorable with the wheat crop index at 74 vs. 37 last year.