March wheat was 23 3/4 cents higher overnight. The dollar was lower. Deliveries against the December wheat contract were 3,498 contracts. Concerns over weather in the US and Australia are credited with sparking sharp gains in wheat overnight. A lower dollar was also seen as supportive. In the US, dry conditions in the hard red winter wheat belt boosted March KC wheat to sharp gains overnight with Chicago wheat following close behind. Persistent dry weather in Western Australia has also caused yield concerns there with wet weather in eastern Australia raising concerns over harvest delays, and possible reductions in yield or quality. While forecasters are still looking for a relatively large Australian wheat crop, the US crop is still in the early stages of development prior to dormancy and the outlook is relatively weak thus far. The quality rating of the US crop was just 47% good-to-excellent as of this past weekend and that is near the recent historic low rating of 43% that was established in 1999. The US is the world’s largest wheat exporter and Australia typically ranks fourth. These weather and crop worries follow the devastating drought in Russia this summer which knocked Russia out of the export picture altogether. There are also some lingering concerns in Russia regarding dry conditions in southern winter grain growing areas. Egypt’s state buying agency, GASC, announced yesterday that it is in the market for 55,000 to 60,000 tonnes of hard wheat and 55,000 to 60,000 tonnes of soft and/or milling wheat from optional origins. The wheat is for shipment in February 1-15. Results are expected this morning. March wheat inched lower yesterday before finishing with a fractional gain. Yesterday’s action was said to be tied to end-of-month liquidation, and some traders indicate that the jump start to the month of December (overnight) may be tied to the large net short position that is being carried by trend-following funds in wheat at a time of rising concern over commodity and food inflation.

Bron: CME