December Chicago wheat was trading 11 cents lower near 7:30 am CST and losses were similar in the KC and Minneapolis markets. The November Matif Milling wheat contract is trading 1.00 Euro lower. European equities dipped lower overnight as investors portrayed renewed fear over Spain's economic outlook while Japan equity markets nudged higher from a 3-week low. Australia's central bank cut their benchmark interest rate by a quarter percent overnight and ECB, BOE, and BOJ meet later this week but rate changes are not anticipated. US stocks are set to open up higher on the day and the US Dollar is lower in early trade. Commodity markets are mixed with gold lower and crude oil slightly higher. Wheat is seeing early pressure from a sharply lower soybean market and marginal losses in corn.

December Chicago wheat fell sharply lower Monday as the soybean market liquidated. Volume was recorded at 95,698 contracts which was slightly lower than Monday and interesting to note that open interest increased by 4,604 contracts on the move lower. The average volume, rise in OI and lower trade suggests a bearish short term outlook for the market.

The weekly Winter Wheat Planting report showed 40% of winter wheat planting complete compared to 25% last week and 36% last year. The 10 year average for this time of year is 47%. The highest percent complete was 57% in 1987 while the lowest was 32% in 2000. The quick pace of planting is not surprising given how quickly soybeans are being harvested and farmers are taking advantage of the favorable harvest conditions to double crop with winter wheat. It's likely that 50% of the Hard Red Winter wheat crop will be planted by next Monday and the recent rainfall in southern Oklahoma, south central Oklahoma, and southern Kansas has helped soil conditions and early germination. The crop is a different story to the north where Nebraska, central Kansas, and north central Kansas continue to suffer from dry conditions. Nebraska is 64% planted and only 16% of the crop has emerged vs. 5 year average of 41%. The same comparison can be made to South Dakota with only 5% emergence vs. a 5 year average of 32%. The slow emergence of the crop may be due to dry soil conditions which could be problematic after wheat comes out of winter dormancy. Kansas wheat is 10% emerged vs. a 5 year average 12% and Oklahoma is 14% emerged which is in line with the 5 year average.

Iraq's tender for 50,000 tonnes of wheat closes this week and it's being reported that Romanian wheat was the cheapest offer vs. Ukrainian, Brazilian, and Argentinean. Romania has stepped into the export market as Russia moves aside. It's being reported that Russia may release 500,000 tonnes of wheat out of their domestic reserves to cool rising food prices. Ukraine wheat was offered at a $6.50 per tonne premium to Romanian as they inch closer to meeting their export cap this year. Ukraine exports have reached 2.6 million tonnes this season or 65% of the maximum volume agreed by traders and the government. The two sides will meet again to discuss the current supply of wheat and export outlook once 80% of the 4 million tonnes export cap has been reached.

Australia continues to trend drier than normal with no substantial rainfall in the forecast except for light showers Saturday in Southwestern growing regions. The crop is beginning to head and harvest will begin to pick up as we move through October. The USDA currently has the crop pegged at an optimistic 26 million tonnes with most in the trade expecting production to reach 20-22 million tonnes. The window for yield increasing rainfall is quickly closing.


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