Pre-Opening Wheat Market Report for 4/12/2010
Pre-Opening Wheat Market Report for 4/12/2010
July wheat was 4 1/2 cents higher overnight. The dollar index was sharply lower overnight.
Traders indicate that a sharply lower dollar is providing support to wheat this morning while the excellent winter wheat crop prospects in the US are helping to restrain the gains. The USDA’s National Agricultural Statistics Service released a survey on Friday that projected an 83% increase in this year’s Texas winter wheat crop to 112.2 million bushels. This increase comes against a backdrop of sharply lower winter wheat acreage in the US overall. Crop prospects are much improved in Texas this year compared to last year when the region saw widespread soil moisture deficiency and outright drought in some areas. Texas is the only state for which the USDA releases an April 1st crop production estimate.
The USDA will release its regular weekly Crop Progress reports this week and traders are looking for the good-to-excellent category to be as high or even higher than last week’s totals for both hard and soft red winter wheat.
The Commitments of Traders report for the week ending April 6th for Wheat showed Non-Commercial traders were net short 49,311 contracts, a decrease of 459 contracts. The Commercial traders were net long 70,689 contracts, an increase of 1,657 contracts and a new record high long position for these traders. The Non-reportable traders were net short 21,378 contracts, an increase of 2,115 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 70,689 contracts. This represents an increase of 1,656 contracts in the net short position held by these traders. Commodity Index traders held a net long position of 220,124 contracts. This represents an increase of 2,197 contracts in the net long position held by these traders.
The wheat market sold off on Friday despite a substantial break in the dollar, and despite the release of a S&D report that many traders considered supportive. The USDA’s S&D report on Friday raised its export projection for 2009/10 by 40 million bushels from last month to 865 million bushels. They also dropped all-wheat ending stocks by 51 million bushels to 950 million. This compares to 1.001 billion bushels on the March report which was the highest all-wheat ending stocks number since 1987. However, soft red ending stocks were raised by another 4 million bushels to a new record large total of 211 million. World beginning stocks for 2009/10 were lowered fractionally and production was raised fractionally. World usage was raised by about 1 million tonnes and this resulted in a drop of about 1 million tonnes in the ending stocks to 195.8 million tonnes. Iraq has issued a tender for 100,000 tonnes of wheat and an Israeli buyer is in the market for 35,000 tonnes of feed wheat.