Pre-Opening Wheat Market Report for 3/29/2010

May wheat was 3 1/2 cents higher overnight. The dollar index was lower.

Support from a lower dollar was credited with boosting wheat prices overnight as traders are expected to shift to a pre-report evening up mentality. The USDA’s Planting Intentions report on Wednesday is not a factor for winter wheat. Spring wheat planted area may be getting a minor boost from recent drier weather and the early melting of much of the snow pack, but traders indicate that low prices will limit gains. In any case, the drier weather will not be reflected on the USDA’s survey.

The Commitments of Traders report for the week ending March 23rd showed mixed activity by funds. Trend-followers were net sellers of 1,262 contracts to increase their near record large net short position to 67,185. Index funds were net buyers of just 488 contracts.

Forecasts call for dry weather across the soft red wheat belt this week with mostly dry weather in the Plains. Light to moderate rain may push into the west central Plains on Thursday with light to moderate rains also possible in spring wheat areas of the northern Plains on Friday. All of this is considered beneficial to crop development for winter wheat and the upcoming planting season for spring wheat.

There were reports earlier today that Russia was having trouble finding wheat of sufficiently high quality to honor recent sales to Egypt. However, Egypt’s main state buying agency reports that shipments are on the way to Egypt and that no quality issues have been detected.

The May wheat contract pushed to a minor new contract low on Friday, but traders said that prices were supported by a lower dollar. Export sales were strong for wheat last week with the latest total running more than double the weekly average needed to reach the USDA’s current export projection. Open interest continues in the slow uptrend that started around the first of March.