Pre-Opening Wheat Market Report for 3/23/2010

May wheat was 1/2 cent lower overnight. The dollar was mostly higher.

May wheat made new lows for the year on March 11th and has remained poised in a narrow range just above those lows ever since. Traders indicate that the market is responding to outside markets, but that there is a balance between good demand on the one hand and ample supplies on the other which is keeping gains and losses to a minimum.

The wheat market is turning its attention to the spring growing season and conditions for winter wheat as well as the planting outlook for spring wheat. The cresting of floods in the northern Plains is setting the stage for an earlier spring wheat planting season than was the case last year, especially since the high points of the flood were near the low end of expectations.

Weekly crop condition reports were released for the major hard red winter wheat states of Kansas, Oklahoma and Texas. As of March 21st, the Kansas wheat crop was rated 64% good-to-excellent compared to just 43% last year and 63% the previous week. In addition, 77% of the crop is breaking dormancy. Soil moisture is overwhelmingly adequate to surplus. Oklahoma to the south of Kansas is basically out of dormancy with 67% of the crop rated good to excellent, also up from last year. Texas is rated 53% good-to-excellent.

This week’s export inspections were 18.8 million bushels in wheat, well above last week’s disappointing total of 10 million bushels. Cumulative inspections stand at 81.4% of the USDA’s projected export total for the marketing year versus a 5-year average of 79.7%. Inspections need to average 14.3 million bushels each week to reach the USDA’s projection.

Wheat posted strong gains early in the session yesterday on moderate fund support and buying by spreaders versus corn. However, wheat gave up most of its gains into the close as traders evened up on the day. India reports that rice purchases by its state run Food Corporation fell 2.45% from last year during the period from October 1st through March 21st. India is working hard to stem food inflation as its economy expands and it plans to add storage for wheat that will be bought after the wheat harvest that starts in April. This year’s crop is expected to be a record 82 million tonnes.