Pre-Opening Wheat Market Report for 7/26/2010

December wheat was 4 1/4 cents lower overnight. The dollar was narrowly mixed.

December wheat started the week with a loss despite continued concern over potential drought losses in Europe and the Black Sea region. Conditions remain dry and mostly hot in major growing areas of Ukraine and Russia with beneficial cooler weather found in areas of Kazakhstan.

In North America, warmer weather has finally pushed into the northern Plains of the US and on into the Canadian Prairie with some areas seeing 80s and 90s today along with drier conditions into mid week. This is considered welcome, especially in the Canadian Prairie where cool and wet weather has brought diminished yield forecasts and threats of increased plant disease prior to harvest. However, a cool air mass is expected to push the hot weather back down into the central Plains of the US after today which may limit the benefits to the Canadian wheat crop.

The Commitments of Traders report for the week ending July 20th showed continued net buying by trend-following (managed) funds in wheat. These traders were net buyers of 14,401 contracts to decrease their net short position to 22,191 contracts. These traders were net short by over 77,000 contracts just a few weeks ago. Index traders were net sellers of 36,646 this week.

Bangladesh is tendering to import 100,000 tonnes of wheat. Trade sources in Spain estimated on Friday that 70% of that country’s wheat crop is harvested with total production estimated at 5.4 million tonnes.

Late harvested hard red winter wheat in the US is coming in with good yields according to cash market sources. This is combining with a large carryover and a relatively slow start to export shipments to make for tight storage conditions in the central and south central Plains.