Pre-Opening Wheat Market Report for 8/19/2010
December wheat was 21 1/4 cents higher overnight. The dollar was marginally higher coming into this morning. December wheat surged higher overnight after recovering yesterday from a new low for the month. Traders indicate that solid demand, including strong demand for corn, is attracting buyers to the grain markets on breaks. The demand situation was highlighted today by ideas in Europe that Russia will need to sharply boost its grain imports this year following the devastating summer drought. While there has been some slight relief of that drought in recent days, conditions are still dry enough to limit planting of winter wheat and that may be spurring the talk of Russian grain imports. In addition, Morocco announced that it needs to import "at least" 2.3 million tonnes of soft wheat and 600,000 tonnes of durum to compensate for a 22% drop in its overall cereals crop this year. With Russian soft milling wheat off the table, Morocco should turn to nearby France along with Germany and the US for most of its needs. While a large portion of their crop shortfall was already in the market, this news is still being viewed as supportive, especially for soft red winter (Chicago) wheat. Morocco also announced that it needs to scrap its import duty on wheat earlier than expected to compensate for higher prices overseas. The Canadian Wheat Board said yesterday that this year’s all-wheat production would come in near 21 million tonnes, up a scant 100,000 tonnes from its July estimate. The CWB also expressed concern that the official acreage and production numbers due out from Statistics Canada on Friday would miss the full extent of acreage lost during the spring-summer planting season. Traders in the US will be looking closely at the Stats Canada numbers tomorrow. Ukraine announced yesterday that it is considering limiting wheat exports to 1.5 million tonnes from September through October, and this was considered supportive by the trade. Reports of crop concerns in Western Australia are also considered potentially supportive as the world’s wheat importers turn to Australia, Canada and Argentina for wheat later in 2010/11 following the droughts in Russia and Ukraine. Sources in Indonesia indicated yesterday that flour mills there have adequate supplies of wheat booked until October, but one analyst noted that this is somewhat thin coverage given the recent decision by Turkish suppliers to curtail shipments of flour to Indonesian due to reduced access to wheat from Russia. This comes as flour mills in Indonesia are expecting to increase overall imports of wheat in 2010/11 due to growing demand. In news just out, Egypt bought 594,000 tonnes of US wheat, and Iraq is tendering for 100,000 tonnes.