March wheat was up 1 cent late in the overnight session. Outside markets look negative. The weaker US dollar and ideas that there will be enough snow cover to insulate most of the hard red winter wheat areas from cold this week are seen as short-term negative forces. In the weekend tender, Egypt bought 175,000 tonnes of wheat from Australia and the US, with 55,000 of the total soft wheat from the US. March wheat closed 15 cents lower on the session on Friday and down 20 1/4 cents for the week. The market was at the highest level since August 6th early last Monday and closed at the lowest level since December 21st on Friday. The strong US dollar and continued weakness in other commodity markets along with concerns that index funds will be active sellers in the next week helped to push the market sharply lower on the day. Ideas that the US might benefit with increased export sales ahead due to a tight supply of higher quality wheat on the world market helped to provide underlying support. Dry weather in China was offset by talk of a better than expected wheat harvest from Argentina and speculative long liquidation selling. Traders see a jump of 1.0-1.5 million tonnes for Argentina wheat for the reports on Wednesday. For the winter wheat plantings report, traders see plantings just under 41 million acres as compared with 37.335 million last year. Traders also see a drop of about 2 million tonnes for world ending stocks even with the jump in Argentina production. India’s Farm Minister indicated that wheat production could cross 82 million tonnes this year as compared with the recent USDA estimate of 80.71 million tonnes. India’s wheat stocks as of January 1est were 21.5 million tonnes as compared with the target of 8.2 million. US ending stocks are expected to drop about 10 million bushels from 858 million in December. The Commitments of Traders reports as of January 4th showed non-commercial traders were net long 26,910 contracts, a decrease of 216 contracts for the week. Commodity index traders held a net long position of 214,067 contracts, up 1,831. While Chicago traders were not too active for the week, we should note that trend-following fund traders in KC (non-commercial without index funds) reduced their net long position by 2,147 contracts for the week to 49,876, and the selling trend is seen as a short term negative force. Poor crop conditions in the US and dry conditions in China plus some food inflationary fears are factors which have helped support the market recently.

Bron: CME