Commodity markets were on the defensive overnight following the Feds announcement of additional monetary easing and low interest rates. Gold traded down $25 at one point and copper, crude oil, and silver all traded lower as well. The EUR/USD and USD/JPY pushed the dollar index higher which kept grain markets steady to lower for most of the evening. Paris Matif wheat is modestly higher overnight. There were 33 Chicago wheat deliveries. This brought the month to date total to 6,071. There were no KC wheat intentions overnight.
Chicago wheat continued its march lower yesterday but found some buying support near key technical levels. The March wheat/corn spread resumed its downtrend and is nearing levels last seen in early September. Traders suggest feeders are beginning to inquire on feed wheat for early 2013 given the collapse in the spread. Export sales will be key today and last week's sales totaled 58,300 tonnes. Some expect an uptick from last week's data considering the recent deals signed with Egypt. A well-known analyst in Europe raised their EU soft wheat exports to 18.8 million tonnes, up 1.1 from last month. The analyst also increased their 2013 soft wheat production estimate by 9% to 134.2 million tonnes. Rainfall in the Ohio River Valley is expected into the weekend which should improve soil conditions. The lower southeast and delta is dry which may intensify moisture deficits.
Long liquidation mixed with technical selling favored the bears yesterday in the aftermath of the bearish USDA report which raised the US ending stocks estimate by 50 million bushels. The trade will focus in on the export sales report this morning with many expecting sales to be near 400,000 tonnes vs. 353,100 last week but estimates are still close to 160,000 tonnes shy of what is needed each week to reach the USDA estimate. Yesterday's volume was pegged at 107,579 contracts and OI declined by 1,286.
The tender lineup is pretty much unchanged. Jordan and Tunisia both bought soft wheat although it's uncertain if any of it will come from the US. Syria's 100,000 soft wheat tender is still pending with a bid deadline of December 17th. Japan is tendering for 120,000 tonnes of feed wheat. Japan bought 134,157 tonnes of milling wheat overnight from the US and Canada. This business is pretty normal and consistent with recent purchases. Western White, Hard Red Winter, US Spring, and Canadian Western Spring wheat were all purchased for March 31 arrival. Indian officials stated that they may release an additional 2.5 million tonnes of wheat for export and the decision will be made by the end of the month. Some believe Asian customers might be seeking 1-2 million tonnes of milling and feed wheat by yearend. India has exported about 3.8 million tonnes of wheat since lifting its export ban in 2011.
*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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