Pre-Opening Wheat Market Report for 7/27/2010

December wheat was 9 1/2 cents higher overnight. The dollar was again narrowly mixed.

The wheat market posted a substantial recovery rally overnight as hot and dry weather continues to stress late-developing wheat in NW Europe. Conditions also remain mostly dry in the Black Sea region despite scattered showers in western growing areas, mostly into Ukraine.

This week’s Crop Progress report from the USDA showed spring wheat conditions at 83% good-to-excellent, up from 82% last week and 74% last year. The 10 year average for this time of year is 60%. The previous highest good-to-excellent rating for this time of year was 2% lower than this year’s rating at 81% in 1993.

A recent surge of warm and dry air into the southern Canadian Prairie may also be improving spring wheat conditions there, or at least alleviating some concern over the potential for slow development and increased disease prior to harvest according to one analyst. Temperatures in parts of the southern Canadian Prairie are expected to be in the low 80s again today and possibly into mid week.

The winter wheat harvest in the US stands at 79% complete compared to 71% last week and 76% last year. The 10 year average for this time of year is 84%.

This week’s export inspections for wheat were 15.409 million bushels, down from 23.512 million last week. Inspections need to average 19.491 million bushels each week to reach the USDA’s export projection for the 2010/11 marketing year.

Weather in Australia continues to be favorable with good rains expected due to the La Nina effect in the southern Pacific. Japan bought 153,326 tonnes of wheat today on its regular weekly tender.