Pre-Opening Wheat Market Report for 6/11/2010

July wheat was 3/4 of a cent higher overnight. The dollar index was narrowly mixed.

The wheat market managed to claw back from its contract lows yesterday, supported by a weaker dollar and a general rally in equities and a recovery in corn. However, there did not appear to be significant buying by funds, even though the trend-following funds are heavily short in wheat.

Weak export demand continues to be a drag on prices according to traders, with clogged storage in parts of the hard red winter wheat belt pulling cash prices sharply lower this week.

The June Crop Report for wheat leaned to the negative side according to traders while the US and world supply and demand reports were somewhat supportive. The USDA raised 2009/10 US exports by 20 million bushels to 885 million and lowered 2009/10 ending stocks by 20 million to 930 million bushels. However, 2010/11 yield and production were each raised slightly, and hard red winter wheat production came in about 40 million bushels above trade expectations.

Ending stocks for the 2010/11 season are now pegged at 991 million bushels, down from 997 million last month. Ending stocks are expected to represent 46.8% of total usage as compared with 45.2% this year and 28.9% last year and 13.2% two years ago. World ending stocks for 09/10 were lowered slightly to 192.9 million tonnes and the USDA lowered world ending stocks for the 2010/11 season moderately from last month to 193.9 million tonnes. World ending stocks for 2008/09 were 165 million and that was up from 122.7 million for the 2007/08 season.

This week’s export sales came in at just 118,300 tonnes for the 2009/10 crop marketing year. Sales need to average 391,800 tonnes each week to reach the USDA’s projection. Forecasts of heavy to very heavy rains for Kansas on Sunday and into Monday added support to wheat yesterday with the hard red winter wheat harvest just stating to move into Kansas this week.

The daily commentaries provide a recap of each commodity’s traded price activity, an analysis of the factors that influenced price activity, a recap of any reports released that day, and a look ahead at the next day’s schedule. CME Group provides market commentaries for corn, wheat, soybeans, gold and silver.

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