Pre-Opening Wheat Market Report for 6/24/2010

December wheat was 2 cents higher overnight. The dollar index was narrowly mixed.

December wheat posted a minor loss yesterday, outperforming the weaker corn and soybean markets in the progress. Traders credit the relative strength to a recent surge in demand from importers, particularly in North Africa and the Middle East. Traders report that Algeria bought 400,000 tonnes of wheat this week on a tender for 50,000 tonnes and Japan bought 125,500 tonnes on its regular weekly wheat tender. Tunisia is in the market for 50,000 tonnes of soft wheat.

The USDA will issue its weekly Export Sales report this morning and traders are looking for this week’s total be only about one half to one quarter of last week’s total of 959,500 tonnes. Sales need to average 380,600 tonnes each week to reach the USDA’s current export forecast.

Wet weather continues to plague the northern Midwest and this is causing more concern over the potential for quality problems with this year’s soft red winter wheat crop. China’s Xinhua News Agency reports that this year’s China winter wheat harvest is expected to be up 0.9% from last year at 108.5 million tonnes. Statistics Canada reported yesterday that Canadian wheat acreage would total 22.720 million acres this year, down 9.2% from last year. However, the survey was taken prior to some of the worst of the recent rains in the Canadian prairie so StatsCan is expecting a further downward revision. Russia’s harvest is starting earlier than in recent years with a mostly favorable outlook.

Sources in Kansas report that yields there are running above average, and the outlook in Australia remains mostly favorable on ideas that this year’s rainfall totals will be higher due to the likelihood of a La Nina weather pattern in the Pacific. The planting season in Australia runs through late July.