December Chicago wheat is trading 12 cents lower near 7:30 am CST. Kansas City and Minneapolis wheat are lower as well. Minneapolis wheat is gaining on KC and Chicago. The November Matif Milling wheat contract is trading 3.50 Euros lower. There were 44 September Chicago wheat deliveries overnight bringing the month-to-date total to 969 contracts. Commodity markets were under pressure overnight following gains seen last week. Tensions in the Middle East along with a more cautious mood by investors weighed on markets. The Euro fell against the US Dollar which added to the negative tilt to commodities. A slightly wetter forecast for the western plains was seen as a negative force in the trade but drier conditions in Australia continue to add support.
Chicago wheat fell under significant pressure overnight and a rising US Dollar added to the downside momentum. Last Friday's gains came with above average volume and bullish changes in open interest. Volume was recorded at 104,096 contracts and OI increased impressively by 14,196 contracts. The increases in volume and OI, along with the sharply higher trade suggest bullish sentiment. The Commitments of Traders reports as of September 11th showed Non-Commercial traders were net long 52,840 contracts, a decrease of 2,351 for the week. Trend-Following Funds (Non-Commercial less index funds) held a net long of 8,664 contracts which was down 3,072 from the week prior. These same traders hold a net long position in Kansas City wheat of 37,147 contracts which was 964 contracts higher than the previous week. Non-Commercial and Non-Reportable combined traders held a net long of 38,058 contracts in Chicago wheat, down 1,575 for the week.
The weather outlook is more favorable for the western plains this week and areas of Oklahoma have seen slightly better precipitation in the last 7 days. The panhandle of OK recorded.50-.75 inches of rain in the last 7 days while areas around Enid, OK have received just shy of an inch, with some surrounding areas slightly more. More rainfall is needed but anything will help at this point. A wetter pattern is expected to develop in the western plains in the 11-15 day forecast but nearly a quarter of the Hard Red Winter wheat belt could remain stressed. These areas include western NE, northeastern CO, and northwestern KS. Australia remains dry with a quarter inch of rain expected to reach areas of the eastern grain belt over the next 2 days but the following 10 days will see a return to hot and dry conditions.
Australian wheat stocks dropped to 9.1 million tonnes at the end of August, which was down 2.4 million tonnes from July. This year's export pace has been good for Australia as they hold a slight advantage to Asian markets, however the recent stint of dry weather and firm cash markets has now forced their cash wheat at a premium to French and US. This is a positive factor for US exports heading into the winter season.
Export tenders continue to flood the market as tension's rise in the Middle East and world wheat prices climb. Russia is expected to slow their pace of exports very soon as prices rise with each announced tender and as shipment periods move into November and December. French origin wheat is now being quoted at a $3 per tonne discount to Russian. The only new tender announced to start the week has been Syria who is seeking to buy 100,000 tonnes of soft wheat.
*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.