Pre-Opening Wheat Market Report for 9/30/2010
Related Keywords: Agriculture Email Print | December wheat was 3 1/2 cents lower overnight. The dollar was lower. December wheat traded at its lowest level since July 30th to start the day session yesterday. Funds were sellers on the break, but a lack of follow-through selling later in the session resulted in a short-covering rally that left the December contract only fractionally lower. This was followed by mixed to lower trade overnight. Traders indicate that improved soil moisture in Russia in recent days and in the US winter wheat belt in recent weeks has helped to pressure the market so far this week, with selling by funds considered the main driving force. Trend following funds moved back to the net short side on the latest Commitments of Traders report. They have held huge net short positions this year, and only moved to a small net long position near the tail end of the late June-early August rally. One analyst suggested that this recent COT history allows for continued selling by funds if crop conditions remain favorable in the Southern Hemisphere and the US, and especially if export demand softens. The USDA will issue its latest quarterly Grain Stocks report this morning. Traders are expecting all-wheat stocks to be up about 215 million bushels from last year’s September 1st total of 2.209 billion bushels. The USDA is also issuing a small grains production update and this is expected to show a fractional drop in all-wheat production from the USDA’s most recent estimate of 2.265 billion bushels for 2010/11. The USDA announced a sale of 110,000 tonnes of US soft white wheat to Egypt yesterday, and traders said that this provided only minimal support. A sale of soft wheat would have been more of a market factor according to one analyst. Traders in Europe report that Tunisia is looking to buy 50,000 tonnes of soft wheat and an additional 50,000 tonnes of durum.