December Chicago wheat is trading 3 cents higher near 7:30 am CST. Kansas City and Minneapolis wheat are higher as well and gaining on Chicago. The November Matif Milling wheat contract is trading 2 Euros higher. There were 20 September Chicago wheat deliveries overnight bringing the month-to-date total to 905 contracts. Wheat is seeing marginal support this morning after Egypt tendered for wheat following the close yesterday. The US Dollar is trading slightly lower as traders anticipate more monetary stimulus to be announced at the end of the FOMC meeting today.
The story in wheat continues to revolve around the world supply situation and growing international demand. However, this was not magnified yesterday after the USDA decided to leave Australian wheat production unchanged at 26 million tonnes, even after Australia's department of agriculture revised production down to 22.5 million tonnes vs. 24.1 previously. Furthermore, some in the trade believe that if weather remains drier the normal in the southeastern growing regions, production could actually fall near 21 million tonnes. An executive for a well-known and global commercial trading company also made comments that suggest Australia could lose their ranking as the world's number 2 wheat exporter due to the drought conditions. Despite the disappointing data for the bulls, wheat still managed to trade higher on the day.
Russian wheat production was revised lower to 39 million tonnes which was in line with market expectations. Some analysts still suggest production is near 38 million tonnes. Russian exports were left unchanged at 8 million tonnes and Ukraine exports were lowered to 4 million tonnes after their government and unions agreed on an export cap last week. Ukraine production was increased to 15.50 million tonnes which is 2.5 million tonnes higher than the July USDA estimate. However, comments from the Ukraine Ag Minister just after the release of the report suggest Ukraine may only produce 14.50 million tonnes of wheat this year.
Jordan bought 100,000 tonnes of Ukraine wheat yesterday for December and January shipment and Egypt announced their 7th export tender in just over a month after the markets closed for an unspecified amount of volume. Traders will monitor the results of the tender closely however it is expected that the business will be done by France, Ukraine, or Romania. The US has not offered wheat in the last 2 tenders.
Large storm systems are sweeping across parts of the western plains this morning. The panhandle of Oklahoma has received nearly a half inch in the last 24 hours and light rainfall is expected in southwest, central, and north central Kansas. While more rainfall is needed, this should benefit early planting of Hard Red Winter 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.
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