Pre-Opening Wheat Market Report for 9/27/2010
Related Keywords: Agriculture Email Print | December wheat was 5 cents higher overnight. The dollar was mixed. A recovery rally on Friday and follow-through buying overnight has taken the December contract back into upper end of its range for the past month and a half. Conditions continue to be favorable for planting of winter wheat in most hard and soft red areas, with plenty of time for localized wet areas to dry out according to one analyst. Winter wheat areas in central and southern growing areas of Russia remain dry, however, and this helped to spawn rumors late last week that Russia could be in the market for US corn. Conditions in Australia are widely mixed with dryness in the west thought to be shaving up to 4 million tonnes off the crop potential late last week while very favorable conditions in more important growing areas in the east have some analysts looking for a bumper crop overall. Another frost over the weekend in Canada may have done some minor damage to late developing crops. A warmer and mostly dry outlook to start the current week is considered mostly favorable. On Friday, the UN Foreign Agriculture Organization raised its 2010/11 world wheat production estimate to 650 million tonnes, up 4 million tonnes from its previous estimate. This came on better prospects in the Southern Hemisphere. They also raised their ending stocks estimate by 3 million tonnes to 184 million. The FAO also raised its world rice number by 3% to a record 467 million tonnes. They noted that increased production in China and India would offset a 4 million tonne loss in Pakistan due to this summer’s floods. They expect global stocks to increase to 133 million tonnes from 125 million tons in 2010. Analysts in Europe are looking for increased acreage there due to the higher prices seen this summer and fall along with substantially higher soft red winter wheat acreage in the US. Gains are already being seen in planted area in the UK, while winter wheat plantings are set to get underway next month in France. The Commitments of Traders Futures and Options report as of September 21st showed Non-Commercial traders were net long 10,008 contracts, a decrease of 11,400 contracts. Trend-following fund traders (non-commercial less index funds) shifted from a net long to a net short position of 10,342 contracts selling a net 11,070 contracts for the week. The selling trend is seen as a short-term negative force.