December Chicago wheat was trading 6 cents higher near 7:30 am CST. Kansas City and Minneapolis wheat traded stronger as well. The January Matif Milling wheat contract had a solid bounce overnight and is up 2.25 Euros. China Q3 GDP was released overnight and came in as expected at 7.4% while industrial output showed a gain of 9.2%. Markets reacted positively to the news which added to the supportive momentum from yesterday after housing starts data created optimism over the growth of the US economy. European leaders will meet today and tomorrow to discuss the EU debt situation with Greece and Spain being the focus of the market. The US Dollar was modestly higher while commodity markets saw gains throughout the evening. Corn found support from a surging soybean market and copper saw its 3rd straight day of gains.
December Chicago wheat has had a difficult time finding its footing all a week but found support from a Minneapolis wheat market that surged 15 cents higher yesterday along with positive action in the corn and soybean market. Volume was terrible yesterday in Chicago wheat with only 51,164 contracts trading and open interest was stagnant at just a slight increase of 36 contracts. The movement in volume and OI all week has been sluggish which coincides with the indecision by many traders as to where markets go from here.
News that China purchased 295,000 tonnes of Canadian Spring wheat sent Minneapolis higher on the day and some traders suggest the total volume of the deal could amount to 500-600,000 tonnes. Additional support is linked to reports that plunging temperatures in areas of southern Australia may have caused serious damage to wheat crops. Australia has dealt with drier than normal conditions throughout its wheat growing season which has already cut their production prospects from 26 million tonnes to 24 according to the October USDA report. Confirmation of loss in yield may not be known until harvest but reports suggest damage has been done.
Traders expect this morning's export sales report to show sales near 325,000 tonnes vs. 279,900 last week. Commercial traders note that inelastic business has been steady in the Texas Gulf and New Orleans; however the US continues to miss out on significant business in the Middle East. Argentina and French wheat remains competitive in these markets. A private analyst out of France cut their production estimate for the EU wheat crop by 700,000 tonnes to 123 million tonnes which is down 4% from last year. South Korea issued a tender for up to 70,000 tonnes of feed wheat for January shipment overnight. Additional pending tenders included 100,000 tonnes from Syria, 50,000 tonnes from Iraq, and 100,000 tonnes from Jordan. The results of the Iraq and Jordan tenders will be announced early next week. Egypt has been absent from the market this week but their head buyer made comments suggesting they might consider adding Hungary to their wheat supplier list in a step to diversify risk in tight crop years.
Rainfall looks limited for the western plains with some forecasts calling for warm and dry conditions over the next 10 days. South Dakota saw precipitation yesterday which should help moisture deficits. Overall, more rainfall is needed in the west while the eastern Soft Red Wheat areas remain more favorable.
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