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NEAR-TERM MARKET FUNDAMENTALS: December wheat made another new contract low overnight, but it was a minor one with the same lack of follow-through selling that has been in evidence over the past few sessions. Traders indicate that bearish news may have been largely processed by the market at this point with a lower dollar and lower wheat futures starting to generate a minor increase in export demand. Planting in winter wheat is in line with the normal pace at 13% complete with improved moisture levels in the southern Plains over the past week to ten days. Harvesting in spring wheat remains behind normal at 69%. This is up from 58% last week and the 10-year average of 82%. However, the pace of harvest is active in the US and Canada with mostly dry weather forecast for the northern Plains into Saturday. North Dakota is 56% harvested vs. 91% as the 5-year average. Zimbabwe has said that it will import 350,000 tonnes of wheat this year to cover a shortfall in production. Zimbabwe had been the breadbasket of its region in Africa in previous decades. Australia’s Bureau of Agricultural and Resource Economics raised its estimate of the current wheat crop by 3.4% to 22.72 million tonnes today. They cited recent rains as having improved conditions in dry areas, although some private crop forecasters indicate that further rains may be needed soon to maintain the new production number. This week’s export inspections were better than expected at 21.5 million bushels. Total inspections stand at 23.4% of the projected total for the marketing year versus the 5-year average of 29.9%. Inspections need to average 19.3 million each week in order to reach the USDA’s projection.
TODAY’S GUIDANCE: A new contract low overnight in December wheat is the latest in a stretch of such new lows in the month of September. However, many of the new lows have been very minor and have been followed by a quick retreat back to unchanged or slightly higher levels. This may be indicating that the wheat market is running out of sellers. It may also be indicating that lower prices and a lower dollar are finally generating some consistent demand for US wheat. However, this probably does not mean that the downtrend has ended. Wheat is simply ready for a modest short covering rally. The December contract ticked through the weak support at 451 overnight and the next support is at 438. Resistance is at 470 and then at 480 3/4.
