Pre-Opening Wheat Market Report for 8/18/2010
December wheat was 1 cent lower overnight. The dollar was mixed to slightly lower. Signs of a slight improvement in Russian weather and a slight cooling of activity on the wheat tender calendar are keeping the market under some pressure this week according to traders. They note that the focus is shifting to the winter wheat outlook in the Black Sea region which is showing a slight improvement from the bleak outlook of just one week ago when Russian officials indicated that up to 1/3 of the country’s winter wheat area could be abandoned this year due to the summer drought. Much more rain is needed in the region by September. Winter wheat prospects in Canada are also a market factor this week with the Canadian Wheat Board indicating that the loss of planted area this spring could leave more acres available to winter wheat this fall. However, winter wheat production in Canada runs at well under 10% due in large part to the more severe climate there, and this limits the potential for increased production from winter wheat. Continued wet soil may also limit the potential for increased winter wheat area. Sources in Australia point to a mixed production outlook with very favorable conditions in the east expected to bring in a bumper crop while late planting and drier conditions in the west may result in a substantial reduction there versus last year. December wheat closed sharply lower on the session yesterday and pushed to the lowest level since July 30th. Egypt bought 55,000 tonnes of hard wheat from the US yesterday on a tender for 55,000 to 60,000 tonnes. Egypt’s normal supplier, Russia, was excluded due to its ban on grain exports along with the fact that it is mainly an exporter of soft wheat. France was excluded since the tender was for hard wheat and France is an exporter of soft wheat. Egypt’s agriculture minister also noted yesterday that the country intends to purchase 6 million tonnes of wheat this year despite the Russian drought.