March wheat was 10 cents higher overnight. The dollar was modestly lower. Deliveries against the December wheat contract were 1,543 contracts with the total for the delivery period to-date at 14,175. Wheat continued its recent uptrend to start the week despite a higher dollar. The March contract posted a strong gain that took it to just under the November high at 800. Traders indicate that weather concerns are the main factor behind the rally with this helping to trigger short covering by large specs and buying by spreaders versus corn and other markets. The main weather concern now appears to be in Australia where rains have continued to fall in eastern growing areas that are at or near harvest readiness. This is causing concern over a reduction in quality of the world’s available supply of high quality (high protein) wheat. Dry weather in the US hard red winter wheat belt, especially the western Plains, brings more of the world’s high quality wheat into question, although the crop there is entering dormancy and improved weather can bring a good recovery into spring. However, one analyst notes that the relatively poor condition of the crop going into dormancy could make winterkill more of an issue this year if snow cover is limited. Forecasts call for limited moisture in the region over the next 10 days. The Commitments of Traders report for the week ending November 30th showed mixed activity by funds. Trend-following (managed) funds were net sellers of just 643 contracts to increase their large net short position to 46,046 contracts. This is far and away the largest net short position held by trend-following funds in any agricultural market. Index funds were net buyers of 3,009 contracts. France expects the area sown to soft winter wheat to increase by 1.5% in 2011 to 5.0 million hectares. Results are being awaited on Bangladesh’s tender for up to 200,000 tonnes of milling wheat. March wheat closed 30 1/2 cents higher on the session Friday which resulted in a strong gain of 91 3/4 cents for the week. Talk that up to 90% of the Australia crop could be downgraded to feed grade helped spark some of the buying as the rain persists. Stats Canada pegged the total wheat crop there at 23.2 million tonnes on Friday. This compares to 22.2 million as their previous forecast, and this was a larger than expected adjustment higher in production. China continues to try to hold down prices in their inflation fight and on top of their weekly auctions of government owned reserve wheat, China is also expected to supply large flour processors wheat in order to help hold down wheat and flour prices.

Bron: CME