March wheat was down 12 1/4 cents overnight. Outside markets were bearish with the dollar up strong. A steady flow of nagging weather issues in recent months has helped support a solid uptrend for wheat, but some traders believe the recent test of the summer highs may have priced in most of the recent issues. The short term weather looks favorable for crops in the US, and there do not appear to be any winterkill issues for Europe or China developing at this point. In addition, traders see the quality issues from Australia as moslty priced into the market already. Argentina weather has been favorable for harvest, and India looks to see another big harvest in a few more months. The USDA attache has pegged the Argentina crop at 14 million tonnes, up 500,000 from the current USDA estimate. Algeria is tendering to buy 50,000 tonnes of milling wheat. Kazakhstan harvested 12.2 million tonnes of grain last year, down from 20.8 million the previous year. A United Nations food agency economist believes that food prices could continue to move higher if dry conditions in Argentina move to drought and if there are winterkill problems with the northern hemisphere wheat crop. Their food price index hit a record high for December. After an impressive rally off of the early lows yesterday, all the way to a high of 801 1/2 in the last hour of trade, March wheat turned lower and closed back down at 789 1/4. Then it pushed to as low as 776 overnight. The wheat market followed the other grain markets lower yesterday. A turn from lower to higher in the US dollar and weakness in other commodity markets helped to trigger the selling, and the pressure continued overnight due to the stronger US dollar. Ideas that some of the snow cover in the central plains could melt this week and leave the crop vulnerable to colder weather for next week helped to provide some underlying support. However, most traders see very little threat in the cold expected for next week. Continued talk that as much as 50% of Australia’s crop could grade out as "feedgrain" was seen as supportive.

Bron: CME