December Chicago wheat was trading 7 1/4 cents higher near 7:30 am CST with KC and Minneapolis following but Chicago led all three wheat markets overnight. The November Matif Milling wheat contract is trading 1.25 Euros higher this morning. European markets traded lower overnight after the IMF cut its 2012 global growth forecast to 3.3% from 3.5%. The Euro is trading lower following the news and the US Dollar is higher. Most commodities traded higher overnight despite the stronger US Dollar and support was linked to news that China announced it would inject around 42 billion of cash into money markets to help boost speculation and support its slowing economy. Additional support in wheat was added after the Russian Agriculture of Minister made comments in regards to their domestic grain supply and exportable surplus of wheat.

Chicago wheat is leading the grain markets higher this morning as traders take profits on short positions from last week and on technical buying ahead of this Thursday's USDA report. Yesterday's traded volume was pegged at a sluggish 46,562 contracts with a 2,493 contract increase in open interest. Many traders in the market will focus their attention on the corn and soybean balance sheet in this Thursday's USDA report but there could be a handful of surprises in the world wheat balance sheet as well. Traders will look for adjustments to the Black Sea production estimates as well as the Australian production forecast.

Australian production is currently estimated at 26 million tonnes and the USDA Australian attache estimates production at 24 million tonnes. Most in the trade believe 20-22 million tonnes is an accurate estimate of the crop given the drier than normal conditions this year. Russia is estimated to harvest 39 million tonnes of wheat this year according to the September USDA report but updated estimates from the Russian Agriculture Minister pegs the crop at 40 million tonnes vs. previous forecasts of 40-42 million tonnes. The minister also estimated the total grain harvest at 74-75 million tonnes vs. previous government estimates of 70 million tonnes. The exportable surplus of wheat for Russia is estimated at 10 million tonnes vs. previous government estimates of 10-12 million tonnes.

India continues to take advantage of its surging domestic stockpiles by entering the export market as global stocks tighten. The USDA estimates India wheat exports at 4.50 million tonnes vs. 0.85 in 2011 and production is estimated at a record 93.9 million tonnes. Reports are circulating that Iran may import 2-3 million tonnes of wheat from India if the export deal can be finalized. Poor storage and infrastructure has hampered any progress in exporting good quality wheat in the past but India's Farm Minister confirmed that India will continue to offer good quality wheat for export going further. Export tenders have been slow this week after a busy month of September for many Middle Eastern countries. A South Korean feed maker has issued a tender to buy 55,000 tonnes of feed wheat overnight.

Nearly a quarter of the Hard Red Winter wheat growing region remains dry, specifically areas of South Dakota, Southern Nebraska, and Northwest Kansas. Rainfall is expected to move through Kansas, Oklahoma, and Nebraska towards the end of this week which could help stabilize early stress to planted wheat however more will be needed this month before the crop goes into dormancy. South Dakota topsoil moistures conditions are running 95% short/very short, Nebraska is 98%, and Kansas is 68%.

 

View All Market Commentary

*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.

Copyright CME Group All rights reserved.