December wheat was 2 3/4 cents lower overnight. The dollar moved higher. December wheat followed last week’s gains with a push to near 740 to start the overnight session despite firmness in the dollar. The market later retreated to lower levels. Stress from dry weather in the US soft red winter wheat belt in the Midwest is considered supportive with forecasts calling for mainly dry weather in the region through late this week. Showers are possible later in the 10-day outlook, but this outlook is considered uncertain. US soft red winter wheat competes directly with soft wheat from Western Europe for sales into the big North African and Middle Eastern import markets and many traders expect the EU’s exportable surplus to shrink sharply into the end of the year, increasing the pace of US export sales. The central, southern and NW Plains in the US have also been dry over the past two weeks. Light rains are expected in the northern Plains during mid week with more substantial rains possible in the central Plains later in the week. The southern Plains may remain mostly dry. Argentina’s Minister of Agriculture said on Sunday that his country will likely export at least 5.5 million tonnes of wheat in 2010/11. Last year’s drought held exports to just 3.6 million tonnes, and exports were previously held in check by inflationary concerns dating back to 2008. The Commitments of Traders report for the week ending November 2nd showed substantial buying by trend-following (managed) funds. These large traders were net buyers of 7,684 contracts to reduce their net short position to 24,911. This is still the largest net short position held by the trend-following funds in any agricultural market, and traders believe that the trend-followers are uncomfortable with large short positions in an inflationary environment, especially at a time of poor conditions for the newly planted winter wheat crop. Index funds were net sellers of 2,920 contracts. The USDA will release its latest US and World Supply and Demand reports tomorrow morning. US export sales are lagging the average pace in comparison to the current export forecast and this could bring a modest revision downward in exports tomorrow or on a subsequent report. Production could be raised slightly for Argentina according to some traders.

Bron: CME