Pre-Opening Wheat Market Report for 6/8/2010

July wheat was 1 1/2 cents higher overnight. The dollar index was mixed within a narrow range just below yesterday’s high.

Modest support from outside markets later in the overnight session was credited with keeping the July wheat contract from making a new contract low overnight. This follows five straight days of new contract lows in July wheat through yesterday’s session.

Traders indicate that the start of the winter wheat harvest in the US along with superb conditions for the newly planted spring wheat crop are helping to pressure the market along with recent strength in the dollar. Conditions are also favorable in Australia with some estimates coming in at over 22.0 million tonnes for the 2010/11 crop there. The USDA currently pegs the Australian crop at 22.0 million tonnes with last year’s crop at 22.5 million. Moisture levels are expected to improve there, although the western wheat belt is still somewhat dry.

Australia’s Bureau of Statistics reports that wheat exports in April were down 23% from March and down 35% from the previous year at just 1.1 million tonnes. Argentina’s Agriculture Secretary said yesterday that their 2010/11 wheat crop would increase to 11 million tonnes or more. Argentina’s planting season starts at the beginning of May and runs through mid July.

The Agriculture Department in Saskatchewan says that if the wet forecast for this week holds up, planting of spring wheat may stall near last week’s level of just 59% complete as compared with a 5-year average near 87%. Planting progress since then is thought to have been just 2-3%. Russia reports that its wheat exports for the first 4 months of the year were up 27% over last year to non-CIS states.

In the US, the winter wheat harvest was 3% complete as of Sunday compared to 4% last year and a 10 year average for this time of year of 8%. The winter wheat crop is rated at 66% good-to-excellent, up from 65% last week, and a 10-year average of 43%. The spring wheat crop is rated at a very high 84% good/excellent which is just below the all-time record of 86% in 1991. This is down slightly from 85% last week, and up from 73% last year. The 10 year average good/excellent rating for spring wheat for this time of year is 70%.

This week’s export inspections for the wheat were 14.379 million bushels. Inspections need to average 17.2 million bushels each week to reach the USDA’s projection. Japan is looking to buy 151,000 tonnes of wheat on its regular weekly tender.