Pre-Opening Wheat Market Report for 8/3/2010
December wheat was 2 1/2 cents lower overnight. The dollar made another new 3 1/2 month low overnight. Severe drought conditions are expected to persist in Russia this week, although recent rains in western Kazakhstan have trimmed the overall drought area somewhat in the Former Soviet Union. Ukraine is also experiencing continuous rains in some areas which are slowing harvest there. Ukraine’s agricultural ministry pegs its grain harvest as of July 30th at 24.19 million tonnes which compares to 26.5 million last year. Ukraine’s wheat harvest to date stands at 15 million tonnes, down from 16.5 million last year. Hungary, which has also received unwelcome rains this year, pegged its wheat harvest at 3.5 million tonnes for 2010/11 today, down 20% from last year. This is in line with previous estimates. Black Sea area traders report delays in shipments of wheat bound for the Far East, but they indicate that there have been no drought-related defaults on sales thus far. India’s farm minister reported yesterday that the country will not impose an import duty on wheat. India was a small importer of wheat over the past year and it currently holds a large strategic surplus of wheat and other grains. Temperatures in the US spring wheat belt remain warm with similar conditions continuing to spill over into the Canadian Prairie. This is considered beneficial. This week’s Crop Progress report showed the US spring wheat harvest at 5% complete. Harvest stood at 3% last year and the 10-year average is 11%. The spring wheat crop is rated at 82% good/excellent compared to 83% last week and 71% last year. The 10 year average for this time of year is 57%. The US winter wheat harvest is 83% complete compared to 79% last week and 83% last year. The 10 year average for this time of year is 89%. December wheat closed higher for the 5th session in a row yesterday. The market has rallied as much as $2.57 per bushels since the June 30th lows. Basis levels were weak due to the strong rally in futures yesterday and traders indicated an increase in selling of all grains by producers on the rally. Egypt bought 180,000 tonnes of Russian wheat yesterday, despite the drought, with traders indicating that no US wheat was offered on this tender. This week’s export inspections for wheat were 22.04 million bushels, up from last week’s 15.9 million. Inspections need to average 19.4 million each week to reach the USDA’s projection