March wheat was down 2 1/2 cents overnight. Outside markets appear mixed. The weaker US dollar overnight failed to provide much support for the wheat market, as traders saw the surge higher yesterday as somewhat overdone. Tightening world supply of higher quality milling wheat is still a positive force for the market. Flooding in Australia reached headline news status in the past few days, but wheat growing areas have been unaffected. Only 6% of the wheat is shipped out of Queensland. However, wheat quality out of Australia is still an issue, with traders believing that 30-50% of the harvest may end up as feed quality. March wheat closed higher on the session yesterday but down 19 1/2 cents from the highs of the day. The highs were put in early in the session, and the market saw long liquidation selling with talk that winter wheat damage from the weekend cold weather in the central plains was not significant. While traders do not see significant damage from the weekend cold snap, talk that the winter wheat crop remains under stress from dryness and talk that some of the crop could see worsening crop conditions ahead helped to support the strong gains early in the day. Traders see another cold blast in the extended forecast models so weather could be a threat again by late next week. Flooding in Australia helped to provide some psychological support on ideas that shipments could be slowed, but the flooding was in the northeast region, which is not a growing area. Weekly export inspections for wheat came in at just 10.3 million bushels, about half of the high end of expectations. This compares with 19.8 million bushels last week and 27.5 million necessary each week to reach the forecast for the season. The Commitments of Traders reports as of December 28th showed non-commercial traders were net long 27,126 contracts, an increase of 6,581 contracts for the week. Non-commercial and nonreportable traders combined held a net long position of 10,088 contracts, which was up 8,432 contracts for the week. The buying trend is seen as a short term positive force. Commodity Index traders held a net long position of 212,236 contracts.

Bron: CME