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NEAR-TERM MARKET FUNDAMENTALS: The modest bounce in wheat overnight follows a major sell off yesterday that continued throughout much of the day. Funds were sellers early and again late in wheat yesterday, and traders said that this came in response to a sharp sell off in energy and equities markets. Traders also noted that wheat lost to corn as spreaders unwound long wheat and short corn positions later in the session yesterday. The USDA’s weekly Spring Wheat Planting Report was released yesterday afternoon and it showed planting at 6% complete compared to 2% last week and 19% last year. The 10 year average for this time of year is 18% planted. The weekly Winter Wheat Conditions report showed 43% was rated good/excellent compared to 42% last week and 45% last year. The 10 year average for this time of year is 52%. However, the very poor category increased slightly to 13% from 11% last week. This came on continued dry weather problems in the SW Plains. Temperatures are expected to start rising in the southern Plains by tomorrow with very warm temperatures expected by Friday. Analysts indicate that this could cause further stress to dry areas of the SW hard red winter wheat belt. This week’s export inspections in wheat were 14.247 million bushels versus 20.679 last week. Total inspections to date stand at 91.3% of the USDA’s projection for the current crop year which remains well above the 5-year average of 85.6%. Inspections need to average just 13.196 million bushels each week to reach the USDA’s projection. Russia’s agriculture ministry reports that wheat exports have hit 15.13 million tons so far in the 2008/09 marketing year. They did not provide a comparison to last year.
CASH NEWS AND TENDERS: Morocco is looking to buy 19,000 tonnes of milling wheat on April 27. Jordan is tendering for 100,000 tonnes of wheat. 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: The main weather story in the US is the surge of cool air that is dominating virtually all of the Midwest and Plains today and pushing down as far as the northern Delta. However, this is expected to start changing by tomorrow with a massive surge of warm to very warm air moving in from the south southwest that should cover most major growing areas in the Midwest, Plains and Delta by Friday. Cooler air is then expected to push into the northern Plains starting on Friday and into the Midwest by this weekend.
TODAY’S GUIDANCE: Improving weather in the central US hard red winter wheat belt, rains in China’s winter wheat belt and a favorable outlook in the Midwestern soft red wheat belt are counteracting an uptick in export demand and further deterioration of crops in Texas and parts of Oklahoma. Of course, the rally yesterday in the dollar may have also disheartened traders who thought that the recent break in the dollar and in wheat futures would correct some of the price disadvantage that US wheat faces on the world market. Traders may now shift their attention to continued drought in Argentina, where winter wheat planting will be soon be getting underway as well as forecasts for hot and dry weather this weekend in the US, which could stress vulnerable crops in the southern and SW Plains. First support is at 510 3/4 in the July contract and again at the December low at 497. Resistance remains at 531 3/4 and again near 541 3/4.
