December Chicago wheat was trading 4 1/2 cents lower near 7:15 am CST. Kansas City wheat was slightly lower while Minneapolis dropped 3 cents. The January Matif Milling wheat contract traded 0.25 Euros lower overnight. Positive manufacturing out of China, better than expected housing data in the US, and confirmation that the Fed will maintain loose monetary policies going forward boosted commodity markets overnight. Grain markets were steady to slightly higher seeing help from a stronger crude oil market and lower US Dollar.
Fears of additional cuts to wheat production for major world exporters continues to add support the market but the sluggish export pace for the US favors the bear camp at the moment. December Wheat surged at the opening bell yesterday but ended the day 11 cents off the highs. Volume was favorable with just over 100,500 contracts trading hands and open interest jumped by 9,892 contracts. The positive trade, average volume, and surging open interest suggest a bullish bias in the short term.
The decision by the Ukraine Ag Ministry to ban wheat exports as of November 15th is beginning to raise tensions in the global wheat market. Comments made by Egypt's head wheat buyer suggest the world's top wheat importer may begin to study the credibility of Ukraine in future deals and the EU Agriculture Commissioner expressed disappointment in the steps Ukraine has taken. As a result of the ban, there are recent deals with Egypt that are now put at risk as open sales are on the books between the two countries for November shipment. Comments made by Egypt and EU officials may have triggered short covering in the market which helped support wheat yesterday.
The market has been waiting for the result of the 50,000 tonnes Iraq tender but officials have decided to postpone the tender until next week due to a religious holiday. Additional business is quiet with Japan tendering for feed wheat and Syria is back in for 100,000 tonnes for November 12th. Export sales are expected to be reported near 350,000 tonnes vs. 410,000 last week but some in the trade have the high end of the estimate at 500,000 tonnes. Sales continue to lag the pace needed to reach this crop years USDA estimate which favors the bear camp. Japan's purchase of 100,000 tonnes last week as well as the sale of 230,000 tonnes to an unknown destination might be included in this week's report.
Severe rainfall in Argentina has reportedly raised concerns over not only further cuts to yields but also quality as wheat nears full maturity. The USDA currently has Argentina wheat production at 11.50 million tonnes with some in the trade suggesting the crop could fall near 10.50 which would be the lowest in 17 years. More rain is expected next week for Argentina. South Dakota, Nebraska, eastern Colorado, Montana, and Northwest Kansas remain too dry and rainfall is needed by the end of this month. Long term weather outlooks suggest more favorable precipitation in November. Snowfall and rain are moving across areas of South Dakota and central Nebraska this morning which should help conditions.
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