December Chicago wheat is trading 1/2 cent higher near 7:30 am CST. Kansas City and Minneapolis wheat are slightly higher. The November Matif Milling wheat contract is trading 1.50 Euros higher. Grain markets are seeing support from higher energy markets and fears that Tropical Storm Isaac will damage row crops in the southeast and Delta. The wheat market is struggling to keep up with corn and soybeans after another purchase of Russian wheat was announced by Egypt over the weekend. European and Asian markets were flat to slightly lower after worse expected economic data was released. The US Dollar is trading slightly lower which is offering marginal support to US Commodities.
The wheat market is struggling to hold a firm footing overnight, despite the higher corn and soybean trade. Bearish weather conditions for most US wheat growing areas and negative short term export news has weighed on futures overnight. Traded volume remains light in Chicago wheat with only 74,543 contracts trading on Friday. Volume was noticeably light last week and open interest was cut by 9,672 contracts Friday as traders took profits on long positions.
The Commitments of Traders reports as of August 21st showed Non-Commercial traders were net long 60,478 contracts, an increase of 281 for the week. Non-Commercial and Non-Reportable combined traders held a net long of 46,754 contracts, up 2,462 for the week. The record long position held by these traders is 50,736 contracts on August 7th, 2012. Trend-Following Funds (Non-Commercial Traders Net of Index Funds) hold a net long of 17,181 which was an increase of 641 from last week. These same traders hold a net long position in Kansas City wheat of 34,820 contracts which was a 2,816 contract increase from last week.
Storms systems moved through parts of North Texas, Oklahoma, and Kansas yesterday which provided good rainfall to start wheat planting. Some areas of western KS were missed and remain dry. Most of Western Oklahoma was missed but southern and eastern Oklahoma will benefit from the moisture. Tropical Storm Isaac is expected to pick up strength as it moves further into the Gulf of Mexico and the projected path has it hitting the Louisiana and Mississippi coasts by Wednesday morning. The storm will push as far north as Arkansas, Western Tennessee, Missouri, and Illinois. This rainfall should be of great benefit to soil moisture conditions as farmers prepare to plant their Soft Red Winter wheat crop.
Egypt, the world's largest importer of wheat bought 180,000 tonnes of Russian and Romanian wheat for October 1-10 shipment. Russian sold 120,000 tonnes while Romania covered the remainder. This was Egypt's 3rd wheat purchase since July 1st. The sale offers a slightly bearish tilt to US wheat market however the trade feels Russia's export pace could slow in the coming months as their domestic wheat and flour prices surge due to this year's lower production. Russia's Deputy Prime Minister will hold meetings with the Agriculture of Ministry on Friday to discuss their harvest and production outlook. The long term outlook for wheat is also supportive as rain in Australia continues to disappoint. Private analyst's now suggest that Western Australia winter wheat production could fall near 6 million tonnes from the 11.6 million tonnes seen last year. The next 2-3 weeks will be a critical period of growth for their wheat crop.
*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.