Pre-Opening Wheat Market Report for 4/22/2010

July wheat was down 1 cent late in the overnight session. Strength in the dollar and weakness in energy and metal markets are seen as short-term negative forces.

With the bounce off of the April 5th lows and continued strength in the US dollar, traders will be monitoring the export sales pace closely this morning to determine if US wheat is staying somewhat competitive on the world market. Traders see weekly sales above 400,000 tonnes for this morning’s release. For Monday’s Canadian plantings report, traders see all wheat planting just under 24 million acres as compared with 24.46 million acres last year.

The market inched higher in relatively quiet trade yesterday compared with the wild swings of Monday and Tuesday. Traders see beneficial weather for the US wheat crops and less concerns with China weather as short-term negative forces. Ideas that the US crop is in great shape helped spark some selling pressures early yesterday which was offset by strength in the other grains. Traders see scattered rains for the plains for the next week or so which looks beneficial to crop development. Soft red areas of Arkansas and Missouri, however, may get hit with 2-4 inches this weekend which could raise some concerns for flooding and disease issues but rains are normally considered bearish at this time of the year.

Pakistan had a good crop season and officials are considering exports to Iraq, Iran and Bangladesh. Jordan bought 50,000 tonnes of Black Sea wheat and traders see the US dollar strength as a factor which makes US wheat less competitive on the world market. Russia government officials have allowed a state-owned company to sell 1 million tonnes of grain from reserves which is mostly wheat. Russia intervention stocks are currently at 10 million tonnes as compared with a grain harvest of 97 million tonnes last year.

Basis levels for US wheat were steady in the plains. Soft red basis at the gulf is at 35 cents premium as compared with near 30 cent discount last year at this time. India state agencies have purchased 15.26 million metric tonnes of wheat from producers so far this season which is up 9.8% from last year’s pace.