Pre-Opening Wheat Market Report for 9/1/2010
December wheat was 13 1/2 cents higher overnight. The dollar moved substantially lower overnight. Deliveries against the September futures contract were 3,704 versus 4,413 contracts on First Notice Day yesterday. Traders indicate that wheat found support overnight from a drop in the dollar along with reports that Germany was a buyer of 20,000 tonnes of hard red spring milling quality wheat from the US, the first such purchase from the US in three years. This sale points to the effects on quality posed by the rainy harvest season in Germany, which is the EU’s second largest wheat producer after France. Sources in Europe expect further buying of milling wheat by Germany with the bulk coming from France, followed by the US. The Grain Board in Iraq reports that it has sufficient wheat to last through January 2011, but it also announced its intention to issue wheat and rice import tenders in October. Officials said that they are considering an offer from neighboring Iran to supply 1 million tonnes of wheat to Iraq. Recent flooding in Pakistan has reportedly destroyed 500,000 or more tonnes of stored wheat and this may have largely consisted of seed for the upcoming planting season according to the UN Foreign Agriculture Organization (FAO). This will shift the focus by some aid providers to wheat seed in coming weeks. Western Australia has received some rains this week and that has relieved very dry conditions in part of that region. The western Australian wheat belt generally accounts for about 40% of the country’s total wheat production. The FAO lowered its world cereal grain forecast for 2010/11 yesterday to 2.238 billion tonnes from their previous estimate of 2.280 billion. They lowered the Russian wheat crop to 43 million tonnes from their previous forecast of 48 million. The FAO’s world wheat forecast was lowered to 646 million tonnes from 651, and world wheat usage was raised to 665 from 659. World rice output was lowered to 467 million tonnes from 472 million. Traders report that there were no bidders on Morocco’s tender for 140,000 tonnes of wheat due primarily to the fact that Morocco’s import tariffs remain at 80%. They announced yesterday that the tariffs will be scrapped as of September 16th. Egypt tendered for more wheat after the close.