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NEAR-TERM MARKET FUNDAMENTALS: The March wheat contract made a small new low on Friday amid general weakness in grains and the soybean complex. However, prices recovered overnight and finished near their highs following a sharp break in the dollar. Traders said that many markets are reacting positively this morning to news that the US will bailout Citigroup along with expectations that the US may also move forward on another substantial economic stimulus package. The tender calendar remains moderately active with demand mainly coming from North Africa, the Middle East and South Asia. A government official in Iran has confirmed that his country is buying US wheat through secondary channels after indicating in recent months that they would not buy any wheat from the US. Growing conditions for Indian wheat which is planted in October are said to be good with a possible increase in production over last year. The Commitments of Traders Report for the week ending 11/18 showed mixed trade by funds. Index funds were net sellers of 5,890 contracts while trend-following funds were net buyers of 6,966 contracts to reduce their net short position to just under 30,000. Index funds are still net long 130,195 contracts. The USDA will issue its latest Export Inspections Report this morning. Iraq is tendering to buy 50,000 tonnes of wheat.
CASH NEWS AND TENDERS: Tunisia bought 75,000 tonnes of optional origin wheat on Friday. Bangladesh is tendering for 100,000 tonnes of wheat with a closing date of December 15th.
WEATHER: Mixed rain and snow is expected today in a broad north-south band of the central and east-central Midwest. Conditions are then expected top be mostly dry into mid week in the Midwest and on the Plains. Scattered rain with widely scattered thunderstorms are forecast in major growing areas of Argentina through the end of the week, but this should not cause significant harvest problems.
TODAY’S GUIDANCE: The dollar is the deciding factor this morning, but we are looking for more two-sided trade this week with decent export sales being the factor that may prevent wheat from sliding into significant new lows. Support is at 508 to 512 in the March contract with resistance at 537 to 539.
