December Chicago wheat was trading 2 cents higher near 7:30 am CST while Kansas City and Minneapolis are seeing equal gains. The November Matif Milling wheat contract is trading 0.75 Euros lower this morning. Markets were under pressure overnight after the World Bank cut its estimate for East Asian growth, including China, which has triggered profit taking in commodities like soybeans, gold, and crude oil. US stocks are set to open up weaker this morning and the US Dollar is trading sharply higher which is adding additional pressure to most commodity markets. Marginal support appeared in the US wheat market overnight on reports of freezing temperatures in areas of the western plains on Sunday.
Chicago wheat was the leader in the grain market overnight but took out last Friday's lows. Volume was extremely light on Friday with only 58,787 contracts trading. December Chicago wheat is gaining on December corn this morning as speculative buying interest shows up as futures sink near the lower end of its trading range since early August.
The Commitments of Traders reports showed Non-Commercial and Non-Reportable combined traders held a net long position of 35,792 contracts, down 3,507 contracts for the week. Non-Commercial traders were net long 50,337 contracts, a decrease of 6,511 contracts for the week and the long liquidation selling trend is seen as a short-term negative force. Trend-following funds went from a net long to a net short position of 1,898 contracts which was a 6,025 contract decline. These same traders cut their net long position in KC wheat by 4,129 contracts and their net long is now 33,235 contracts.
The western plains were mostly dry over the weekend but rainfall is expected to reach areas of the southern plains later this week. Buying interest may have shown up overnight after it was reported that temperatures reached the low teens on Sunday in Nebraska and northern Colorado and upper 20's in western Oklahoma. The freezing temperatures may have damaged emerged wheat and replanting may need to take place. The recent rainfall should aide wheat development but will miss dry areas of the Hard Red Winter wheat growing regions and could keep up to 20% of this area under stress the next two weeks. The driest regions include north central and northwestern Kansas, Nebraska, and South Dakota. Southeastern Australia saw.10-.50 inches of rainfall over the weekend and the western growing region is expected to see similar totals later this week. Farmers are planting wheat in the Black Sea and scattered showers are expected to ease drier than normal areas over the next 10 day.
Long term support in wheat continues to come from thoughts that the world wheat balance sheet is tightening which could spur on US exports later this year. US wheat continues to be overpriced in the world market as France and Australia step in to cover business in the Middle East. Iraq made no purchase on its tender for 50,000 tonnes of wheat from any origin and reasons for this are unclear at the moment. The cheapest offer was Romanian wheat at $399.50. The French farm ministry reduced its soft wheat crop estimate to 35.9 million tonnes vs. 36.5 last month but it is still 5.6% higher than 2011. Australian wheat production estimates continue to be near 20-22 million tonnes while the USDA is at 26 and the USDA Australia attache is at 24. The trade expects a production downgrade on this Thursday's USDA report.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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