Pre-Opening Wheat Market Report for 3/17/2010
May wheat was 1/4 cent higher overnight. The dollar was marginally lower late in the overnight session.
Wheat remains in a minor uptrend that started late last week. Traders indicate that support is coming from a combination of weakness in the dollar, a fair-to-good pace of export sales and concern over flooding in spring wheat areas. Some support may also be coming from the fact that trend-following funds continue to maintain a very large net short position in Chicago wheat.
Funds were modest buyers yesterday as wheat reacted to rallies in equities and many key commodity markets along with a lower dollar. Forecasts of colder weather this weekend in the central and eastern US may be providing some additional support as the winter wheat crop starts to grow following the recent melting of the snow pack. However, analysts indicate that this mild cold snap should not pose a serious threat since the winter wheat crop is not that far advanced out of dormancy in areas that are likely to be affected.
Australia’s Bureau of Meteorology reports that the El Nino effect in the southern Pacific continues to decline. This outlook is based on continued cooling of water temperatures in the Southern Pacific. Yesterday’s rally took the May wheat contract to its highest level since last Wednesday, the day that the USDA released its March supply and demand report. That report boosted the all-wheat carryout to over 1.0 billion bushels, the highest level since the late 1980s with the soft red wheat carryout rising to a new record of 207 million bushels.