March wheat was 3 3/4 cents higher overnight. The dollar posted a moderate gain early overnight and then trimmed its gains into this morning. Wheat traders indicate that they are following weather developments in Australia and the dollar very closely this week. The burst to the upside in early December was largely based on wet weather and the expected downgrading of wheat quality ratings in eastern Australia. Trend-following (managed) funds covered a major portion of their large net short on that burst, but they remained net short as of the most recent COT report. position. Indications of somewhat drier weather ahead in eastern Australia were credited with helping to generate yesterday’s sell off. However, moisture levels remain high and harvest delays are expected to continue in some areas. In addition, many observers believe that the reported drop in quality in wet areas of the east is already locked in. Welcome snow has fallen in the EU’s two big wheat producing countries, France and Germany, into the start of this week and this is helping to protect the young winter wheat crops there from very cold temperatures. However, snow in parts of Italy is hampering some late planting. Traders said that yesterday’s selling included fund selling, selling by spreaders versus corn and selling based on technical indicators. Overnight strength was credited to an easing in the dollar this morning following its earlier gains along with Egypt’s tender for wheat. Egypt has mainly bought soft wheat from Europe recently and hard wheat from the US. A sale of US soft wheat this week would likely be considered supportive according to one analyst. Egypt announced a tender yesterday for 55,000 to 60,000 tonne cargoes of wheat with results expected today. Tunisia said today that it plans to gradually liberalize wheat and barley imports which are currently subject to a state monopoly.

Bron: CME