March wheat was down 10 3/4 cents late in the overnight session. Outside markets look negative today, and wheat is especially sensitive to the higher US dollar, which might slow demand for US wheat. The strong US dollar and some light concerns that China and India could overreach on their tightening measures to slow inflation helped to spark weakness in wheat and a wide range of other commodity markets overnight. Some increased world support for the idea that the G20 should tame volatile commodity prices with increased regulation was seen as another reason for the selling pressures overnight. March wheat closed sharply higher on the session yesterday, and July wheat pushed to a new high into the close to move above 880. The market saw early strong gains led by active speculative buying with talk of continued strong short term export demand. A pickup in short term demand is helping to provide a base of support as traders see US wheat competitive on the world market. Unrest and protests due to high food prices continue to spread, and the upside may have been limited by talk from French officials that high food prices suggests more regulation may be in order to avoid further food riots. US wheat is competitive on the world market and the tender wire is active especially from North Africa countries for near-term delivery. Lebanon tendered to buy 22,500 tonnes and Algeria tendered to buy 50,000 tonnes of milling wheat. Iraq is still tendering for 100,000 tonnes of wheat and Bangladesh is tendering for 50,000 tonnes of wheat and 30,000 tonnes of rice. Poor weather for dormant winter wheat crops in the US and China has added underlying support to the market. An AP report indicates that the key producing province of Shandong is facing its worse drought in at least 40 years. Drought has hit more than half of the wheat land in the province, which would be about 2 1/2 million acres, and some areas have not seen rain in four months. Weekly export inspections came in at 23.07 million bushels, which was similar to last week and near the low end of trade expectations. Cumulative shipments have reached 55.9% of the USDA forecast for the season as compared with 65.1% as the 5-year average for this time of the year.
Join the Discussion