July wheat was 2 1/2 cents higher overnight. The dollar index was mixed.

The wheat market plunged again yesterday, marking the third straight day of significant losses. This took the July contract to another new contract low, and the July contract also closed near the lows of the day. Traders indicate that generally favorable weather and burgeoning world supplies are weighing on the market.

The UN’s Foreign Agriculture Organization supported this view by increasing its world wheat projection for 2010/11 this morning to 676.5 million tonnes. This compares to their previous total of 675 million. The USDA’s May estimate was below both of these numbers for 2010/11 at 672.18 million tonnes. Traders have been assuming in recent months that 2010/11 world production would drop from the previous year’s total of 679.98 million tonnes, but that projected drop is getting smaller and smaller as prospects improve in Australia and elsewhere.

This comes as the US winter wheat harvest advances north from Texas, where it is still underway, into Oklahoma. Yields and quality are being described as somewhat better than expected, adding to the 2010/11 supply outlook. Traders note that wheat did find some support from a lower dollar overnight. That support continued after the dollar rallied leading one analyst to suggest that the wheat market has again temporarily run out of sellers due to the fact that farmers are busy in their fields and trend-following funds are already heavily short.

Egypt’s state buying agency, GASC, said yesterday that it is buying at least 55,000 to 60,000 tonnes of wheat for delivery during the July 1-10 timeframe. Forecasters call for significant heat in the southern Plains starting on Saturday and extending into early next week. This may spread north and east to cover the entire central US grain and soybean belts in the 11-15 day timeframe. The northern Plains may see a series of thunderstorm clusters during this period, adding to the already substantial moisture in that region.

The USDA will issue its weekly Export Sales report tomorrow morning, one day late due to this week’s Memorial Day holiday.
Bron:cme