Pre-Opening Wheat Market Report for 5/7/2010

July wheat was 3/4 of a cent lower overnight. The dollar was lower. Deliveries against the May wheat contract totaled 154 contracts this morning with the total for the delivery period so far at 3,484.

The July wheat contract traded inside the April 26th daily trading for the 8th straight session yesterday, and overnight action also remained inside that broad 1-day trading range. However, recent price action has clustered near the April 26th high which is also the high for the month of April in the July contract. Prices are also nearing the 100-day moving average which stood at just below 517 3/4 overnight.

One analyst noted that yesterday’s relatively positive performance in wheat in the face of massive selling in other markets may be due to the fact that trend-following funds remained heavily net short in wheat as of the last COT report. This week’s annual wheat tour in Kansas showed a yield near last year’s levels. Last week, traders had expected the yield to be at a multi-year high.

Net export sales for wheat were in line with trade expectations yesterday at 150,200 tonnes for the current marketing year and 134,100 for next year for a total of 284,300. As of April 29, cumulative wheat sales stand at 93.6% of the USDA forecast for 2009/2010 versus a 5 year average of 96.6%. Old crop sales need to average 322,000 tonnes each week to reach the USDA forecast.

Traders said that some support yesterday also came from a mild frost threat this week and the possibility of a more extensive frost this weekend. Traders in Europe reported yesterday that Algeria is tendering for 50,000 tonnes of optional origin milling quality wheat for shipment in July. With the Euro in a tailspin, traders indicate that this business is even more likely than usual to go to France. French wheat is also being loaded later this month for shipment to Mexico according to trade sources. This rare sale is said to be for 30,000 tonnes.