Pre-Opening Wheat Market Report for 8/6/2010
Related Keywords: Agriculture Email Print | December wheat was 9 3/4 cents higher overnight. The dollar remains mixed in a narrow range above recent lows. December wheat soared by its 60-cent limit yesterday as the effects of the Russian drought continued to make themselves felt. Russia is assessing its options and this resulted in a ban yesterday on exports from August 15th to December 31st. Reports yesterday indicated that this would include existing contracts, but this was clarified today by First Deputy Prime Minister Shuvalov who said that all existing export contracts would be honored. This followed reports that some traders were moving to declare a force majeure on existing sales. Shuvalov added that the terms of the August 15th through December 31st ban might also be altered depending on harvest results. The current ban affects wheat, corn, barley, rye and flour. The market was sharply higher to start the overnight session, but one analyst said that Shuvalov’s comments helped to trim most of the gains into this morning. Traders report that nearby Ukraine may default on some smaller sales that are near their shipping dates, and reports also indicate that South Korea has shifted a large feed wheat purchase from Ukraine to the US. Egypt expressed concern over the dangerous rise in wheat prices, but it added that it has a 6 month supply of wheat on hand in case of emergency. Argentina’s president said yesterday that 10% of their wheat crop remains to be planted due to wet conditions there. However, she added that 2010/11 production will total 13 million tonnes, up from 7.5 million last year. Some private projections are coming in below that near 12 million tonnes for 2010/11. Brazil said that it may not need Russian wheat all this coming year due to improved crop prospects in neighboring Argentina. This week’s US export sales were strong again at 854,600 tonnes. The USDA also announced a fresh sale of 110,000 tonnes of hard red winter wheat yesterday to an unknown destination for delivery in the 2010/11 crop marketing year. This was not included on the weekly total. As of July 29, cumulative wheat sales stand at 34.0% of the USDA forecast for 2010/2011 versus a 5 year average of 34.9%. Sales need to average 410,000 tonnes each week to reach the USDA forecast. Traders in Europe indicate that wheat exports from Bulgaria are up despite a lower crop there this year with 150,000 tonnes currently being loaded. Egypt has announced that it will buy 60,000 tonnes of wheat per month to make up for the shortfall in Russian sales. Tunisia is tendering for 75,000 tonnes of hard durum wheat.