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NEAR-TERM MARKET FUNDAMENTALS: Traders said that wheat was a follower of the sharply higher soybean market yesterday, and this continued overnight. A lower dollar and sharply higher equities were cited as a major supportive factor yesterday as was a wave of heavy buying by funds. Weather is also thought to have shifted to the supportive side with delayed fieldwork reported on the Canadian Plains along with the ongoing delays in spring wheat in the northern Plains of the US. Dry and cool weather in Russia is also causing delays with dry conditions also a potential problem in neighboring Ukraine. This is balanced against a more favorable crop outlook in the southern Plains of the US where rain is forecast through the middle of next week. The big improvement in soil moisture seen in SE Australia over the past week was also considered beneficial. Yesterday, the Buenos Aires Grains Exchange projected this year’s planted area for wheat in Argentina at 3.7 million hectares compared to 4.55 million last year. An ongoing drought and difficulty obtaining financing are blamed for the reduced area. Planting normally gets underway in Argentina at the beginning of May. Today is first notice day against May futures contracts. Wheat deliveries were heavier than expected at 8,122 contracts. The USDA will release its latest weekly Export Sales Report this morning. Traders are looking for a number in line with last week to a bit higher.

CASH NEWS AND TENDERS: Japan is in the market for 156,000 tonnes of wheat this week on its regular tender. The biggest feedmaker in South Korea is looking to buy 55,000 tonnes of wheat for September-November delivery. An Israeli consortium is in the market for 30,000 tonnes of wheat. Iraq has announced a tender for 50,000 tonnes of wheat from any origin.

WEATHER: The US weather forecast is much the same as yesterday. Rains are expected across a wide swath of the Midwest today with locally heavy amounts of 1-2 inches. This should be focused tomorrow along a band running from Missouri through Illinois and Indiana into northern Ohio. The southern Midwest may see further rains on Sunday with a back-and-forth rain system hitting much of the Midwest from Monday through at least the middle of next week. Rain and snow is expected in the northern Plains today with rains also hitting the central and SE Plains. The northern Plains should then clear with the southern Plains getting coverage on-and-off into the middle of next week.

TODAY’S GUIDANCE: Wheat was a follower of the much stronger action in soybeans and corn yesterday and it may continue in this role today. Weather remains mixed with the southern Plains still expecting beneficial rains this week while planting delays in Canada and the northern US Plains and dryness in Russia and Ukraine are a concern. That may leave the recently weaker dollar as the main market factor in wheat. First support is at 527 to 528 in the July contract. Next support is at 515. Resistance is near 542, 552 and 558.

This content originated from – The Hightower Report.
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