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NEAR-TERM MARKET FUNDAMENTALS: Fund buying supported the wheat market early yesterday according to traders, but this evaporated later in the session. A firmer tone overnight was credited to a lack of selling in futures as well as the potential for lower planted acreage for soft red wheat and possible planting delays in soft red winter wheat. These delays are due to recent rains and the continued lateness of the US summer crops. The winter wheat crop is 36% planted versus a 5-year average of 39% and it is 13% emerged compared to the 5-year average of 14%. This week’s export inspections in wheat were above trade expectations at 24.020 million bushels. This was the third straight week with inspections well above 20.0 million bushels. Traders indicate that the improved outflow of wheat may not be particularly bullish. One said that it amounts to simply “catching up” after a slow start in both export sales and export inspections for wheat at the start of the current crop marketing year. Export inspections need to average 18.980 million bushels each week in wheat to reach the USDA’s export projection for the crop marketing year. Iraq has announced yesterday that it will tender for at least 100,000 tonnes of optional origin wheat with a closing date of October 4th. A South Korean miller is tendering on Wednesday for 19,500 tonnes of US wheat for delivery in late 2009/early 2010.
TODAY’S GUIDANCE: Wheat has been going nowhere fast in recent weeks. The lesson this is teaching us is that there may still be some room to the downside. Improved export sales and inspections are a plus, as is the likelihood of lower soft red wheat acreage and possible further delays in planting. However, the prospects for wheat production may actually be improving around the world (again!) and this adds to an already large supply. As a result, wheat may remain the dumping ground for sellers. This may include trend-following funds and spreaders versus corn. First support in December wheat is 451 with next support at 425 1/4 to 430. First resistance is near 467 and then in a zone from 467 to 470 1/2.
