Pre-Opening Wheat Market Report for 3/22/2010

May wheat was 1 cent higher overnight. The dollar was marginally higher into this morning.

The wheat market is starting out on a quiet note this week with traders expected to be watching outside markets and the weather for price direction. Floods are expected to crest slightly below last year’s levels at Fargo, North Dakota this week and flooding to the north in Canadian wheat growing areas is expected to be out of the way sooner than last year. This is considered favorable for spring wheat planting in both the US and Canada.

In addition, weather across the soft red wheat belt is clearer to start the week than was expected at the end of last week. A moderate rain system is expected to push into the central and southern Plains by mid week and then push across the Delta and mid-South into the end of the week. Traders indicate that this would be favorable to the winter wheat crops which generally have adequate soil moisture and warmer weather and light to moderate rains to develop into spring.

A high-ranking panel in India approved an indefinite extension of tax-free wheat imports for that country late last week. This comes amid growing concern over food inflation in India. The tax-free deadline had been scheduled to expire on March 31st. Indian officials also made a point last week of stating that the monsoon rains "will" return to normal this year after last year’s very poor summer monsoons. El Nino is expected to weaken or disappear by this summer, but some sources there indicate that the unusual early prediction of normal rains is intended to dampen inflationary expectations.

The Commitments of Traders Futures and Options report as of March 16th for Wheat showed Non-Commercial traders were net short 39,359 contracts, down 7,258 contracts. The Nonreportable traders were net short 21,735 contracts, a decrease of 1,029 contracts. Non-commercial and nonreportable combined traders held a net short position of 61,094 contracts. This represents an increase of 6,229 contracts in the net short position held by these traders.

Australia’s Productivity Commission said today that the country’s remaining export restrictions may be abolished by next September. Australia has been transitioning from a managed export system in recent years.