Wheat: Pre-Opening Wheat Market Report for 3/25/2011
May wheat was up 8 3/4 cents late in the overnight session. Outside market forces looked slightly positive with equity and some commodity markets higher but a firm tone to the US dollar as an offset. The market has found choppy trade in the past week on changing weather forecasts and mixed influences from the other grains. Ideas that the US export demand will remain strong in the months just ahead with a tight supply of exportable surplus wheat from Europe has helped to support the market. However, traders see higher world production for the coming season and the possibility of higher world ending stocks if weather is normal. May wheat gained ground yesterday on renewed concerns over the weather in the southern US winter wheat belt after some of the moisture was taken out of the forecast Wednesday night. The western Kansas region may miss out on the rains into the middle of next week, but a system later next week could bring some rain to the entire winter wheat belt. Systems on the weekend and early next week appear to favor the eastern plains. Traders remain concerned that without some increase in moisture, crop conditions will deteriorate further for Oklahoma and Texas and that Kansas crop conditions will decline as well. The weekly export sales report was also viewed as supportive, as net sales for the week ending March 17th came in at 659,700 metric tonnes for the current marketing year and 86,000 for the next marketing year for a total of 745,700, near the high end of trade expectations. Cumulative wheat sales stand at 95.4% of the USDA forecast for the 2010/11 (current) marketing year versus a 5 year average of 90.7%. Sales of just 146,000 metric tonnes are needed each week to reach the USDA forecast. Traders were also surprised to see China as a buyer of 116,000 tonnes of US wheat as part of the weekly sales totals. This has traders talking about the China dryness situation for their winter wheat. The International Grain Council believes that world wheat production for the 2011/12 season will reach 673 million tonnes, up from 649 million last year. The USDA attache from Canada believes that wheat, barley and oat production could increase 11% for the 2011/12 season. The Russia Grain Union indicated that overall grain harvest this year could reach 86 million tonnes, up from 60.9 million last year.