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NEAR-TERM MARKET FUNDAMENTALS: Traders said that short covering ahead of today’s USDA reports was responsible for the strength in wheat yesterday and overnight. Traders are looking for spring wheat plantings to drop near 500,000 acres from last year’s total of 14.135 million acres which will push total acres planted to wheat down near 4.5 million acres from the 2008 total of 63.147 million acres. These reports are not expected to be as influential for KC and Chicago wheat as they are for corn and soybeans, although a surprise is possible on the Quarterly Stocks Report. Weather remains a market factor this week with additional rains expected in the northern Plains and much of the Midwest. This is expected to start today in the west and move east through Friday. The central Plains are expecting moderate rains over the next few days, but forecasters say that it is unclear whether the still-dry areas of the SW Plains will see much additional relief. State crop condition reports show little or no improvement so far in the winter wheat crop through Sunday, although the numbers should look better next week according to one analyst. Texas dropped to 64% poor-to-very-poor despite light to moderate rains over the past week. Oklahoma also remains in poor condition with the good-to-excellent rating at just 26%. However, conditions are better as one moves north. Kansas wheat is at only 42%% good-to-excellent, although this is down from 43% last week. Nebraska, is at 68% good-to-excellent. Soft red wheat areas are primarily good-to-excellent with adequate to ample soil moisture levels in most areas. The Egyptian government indicated today that it will probably allow imports of wheat from Ukraine starting with the new crop year on July 1. Imports have been banned from Ukraine this year due to poor quality. This adds to the competitive pressures on high-priced US wheat. This week’s export inspections were 15 million bushels, down from last week’s total of 22.17 million. This was below trade expectations, but it still remained slightly above the average needed each week to reach the USDA’s projection for the marketing year. Cumulative exports have reached 85.9% of the projected total compared to the 5-year average of 80.8%. China’s Ministry of Agriculture reported yesterday their winter wheat crop is experiencing increased incidence of stripe rust, a fungus that affects yield. As of the middle of last week, the area affected was up 52% over last year at 1.39 million hectares.
CASH NEWS AND TENDERS: Jordan is tendering for 100,000 tonnes of wheat. A South Korean firm has bought 22,000 tonnes of US wheat. An Israeli consortium is tendering for 25,000 tonnes of wheat. Egypt is tendering for between 25,000 and 60,000 tonnes of optional origin wheat for late April shipment. The United Arab Emirates is tendering for 40,000 tonnes of milling wheat from optional origins. Iraq is tendering to buy at least 50,000 tonnes of wheat.
WEATHER: Additional rains expected in the northern Plains and much of the Midwest starting today in the west and moving east through Friday. The central Plains are expecting more moderate rains over the next few days, but forecasters say that it is unclear whether the still-dry areas of the SW Plains will see much additional relief.
TODAY’S GUIDANCE: Wheat was the strongest grain market yesterday following last week’s hard break, and it may act somewhat independently from corn and soybeans today if those markets see a surprise on the USDA reports. Big world stocks, good crop weather in most areas and aggressive competition in the export market will continue to keep the pressure on in wheat over the longer term, but a quick rally is not out of the question.
TODAY’S MARKET IDEAS: The trend is clearly lower, but this does not rule out a rally to near 535 in the May contract.
