Pre-Opening Wheat Market Report

September Chicago wheat traded 14 cents higher overnight and pushed into new highs for the move. Outside markets are supportive with a more positive tilt to commodity markets, a weaker US dollar and a strong tone for metal markets. There were 27 wheat deliveries in Chicago yesterday, bringing the month-to-date total to 882 contracts. European wheat futures surged to a new contract high overnight as firming basis levels in Russia and crop worries for the Black Sea region spring wheat crop continue to support. Poor weather for corn in the western Corn Belt plus a mostly dry and hot forecast for Black Sea spring wheat producers into the end of the month has helped to support the strong gains. The market pushed sharply higher yesterday and managed to push out to new 11 month highs. Minneapolis wheat was also up strong while KC wheat lagged gains in the other markets by about 5 cents. The continued surge in corn prices on fears of broadening pollination problems in Iowa next week helped to support active buying. The USDA lowered US and world ending stocks this week and commercial traders see the need for a further 3-5 million tonne drop in global production from the USDA estimate. In addition, surging feedgrain prices suggest a significant increase in global wheat feeding for livestock. Net weekly export sales for wheat came in at 311,800 metric tonnes which was well below trade expectations. Sales of 533,000 metric tonnes are needed each week to reach the USDA forecast. However, traders see a narrowing of the Black Sea wheat price to premium quotes from Europe and the US and a better export environment soon. Iraq is tendering to buy 50,000 tonnes of wheat. Surging corn prices and ideas that US wheat sales will pick-up in the weeks ahead helped to support. Australia wheat is seeing colder weather and slow growth for now and traders are concerned over the possible development of an El Nino episode and the strong correlation with Australia drought.