March wheat was up 6 3/4 cents late in the overnight session. Outside markets look positive for today. The continued rally for milling wheat futures in Paris leaves US wheat more competitive on the world market. Traders remain concerned with poor crop conditions for the hard red winter wheat crop in the US and its vulnerability to some winterkill damage from the upcoming cold weather. Dryness and poor crop conditions for dormancy are a concern, but snow cover is providing insulation for much of the crop. With rains in Australia spreading to the south, more of their harvest could be graded as feedwheat. Traders believe than nearly 10 million tonnes of the crop (about 40%) could be below milling-quality standards. March wheat fell nearly 17 cents in the last hour of trade yesterday, as higher than expected production from India, the lack of a significant weather threat on the horizon and index fund selling were suspected as negative forces. Stops were also activated when the market pushed under Friday’s lows to move to its lowest level since December 27th. Some exports to Egypt plus ideas that US exports will begin to pick up steam as Europe’s, Russia’s and Australia’s supply of higher quality wheat runs dry helped provide some support. Weekly export inspections came in above trade expectations at 23.7 million bushels, compared with 27.5 million necessary each week to reach the USDA projection. The previous week’s inspections totaled just 12.6 million bussels. Ideas that India’s production could be higher than expected and news that India’s January 1st stocks were a whopping 21.5 million tonnes as compared with a target of 8.2 million tonnes helped to limit the early advance yesterday. Algeria is tendering to buy 50,000 tonnes of optional origin milling wheat for March shipment, and Iraq, Bangladesh and Libya are still tendering. For the winter wheat plantings report for tomorrow morning, traders see plantings just under 41 million acres, up from 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 and possibly India’s production. Traders see December 1st stocks near 150 million bushels above last year, which was 1.782 billion bushels. For the supply/demand report, traders see ending stocks dropping about 10 million bushels from last month’s estimate of 858 million bushels for the 2010/11 season.

Bron: CME