Pre-Opening Wheat Market Report for 9/20/2010
December wheat was 9 1/4 cents higher overnight. The dollar was lower. A lower dollar and surging prices for soybeans, corn and cotton were said to be supporting wheat in the overnight session. This pushed the December contract above its September highs to its highest level since August 12th. Frost occurred in major growing areas of the Canadian Prairie on Friday, spreading into Saskatchewan in the process. The head of the Canadian Wheat Board said that this will likely lower quality for spring wheat in Western Canada. In a typical year, about 62% of the crop achieves the two highest quality levels. The CWB had previously projected this to fall to 42% and now it may move its projection even lower. Traders indicate that wheat is a follower on the current rally as markets grow concerned over looming tightness in markets such as corn and cotton, along with general inflationary ideas in major agricultural markets and concern over the potential effects of a battle for acres in the US between corn, soybeans and possibly cotton next spring. Feed wheat prices in Europe rose to their highest level in 2 1/2 years this morning and Chinese customs data show that China imported 90,221 tonnes of wheat in August. The Commitments of Traders reports for the week ending September 14th showed funds leaning to the sell side. Trend-following (managed) funds were net buyers of just 223 contracts to increase their small net long position to 728 contracts. Index funds were net sellers of 4,124 contracts. Egypt’s trade minister said on Friday that the country has enough wheat on hand to prevent the sort of riots that accompanied higher prices and spot shortages in 2008. One analyst noted that concern over higher prices for agricultural commodities appears to be generating increasing augmentation of strategic reserves in major importing countries such as Egypt. He also noted that this could also happen in non-importing countries as well, such as Russia and Ukraine. Iraq issued a tender for 100,000 tonnes of optional origin wheat today. Syria is looking for just 27,366 tonnes of soft wheat. India’s Farm Minister said on Friday that India had no plans to lift its 3-year ban on wheat exports despite this year’s record crop of 82 million tonnes.