March wheat was 11 1/4 cents lower overnight. The dollar was higher. Deliveries against the December wheat contract were 498 contracts with the total for the delivery period to-date at 15,387. Yesterday’s moderate sell off in wheat continued overnight as the dollar shows unexpected resiliency. This has some traders talking about end-of-year liquidation in commodity markets that have seen strong gains during 2010. This includes wheat to some extent, although the wheat market has pulled back from its summer highs and trend-following (managed) funds still hold a large net short position in wheat. Yesterday’s action brought a push above 800 in the bellwether March contract before selling emerged to take the market lower. France’s farm agency, FranceAgriMer, said today that it expects this year’s winter and spring soft wheat planted area to hit 5.04 million hectares, up 2.3% from 2010/11. This increase is expected to come at the expense of lower barley and durum area. FranceAgriMer also raised its estimate of 2010/11 (current crop year) exports to destinations outside the EU. They were pegged at a record large 11.6 million tonnes based on a bigger estimate for the 2010/11 crop as well as strong demand in the first half of the marketing year following the summer drought in Russia and harvest rains in neighboring Germany. Dry conditions remain in effect in the US hard red winter wheat belt on the Plains with forecasts calling for dry weather to continue over the next 10 days. Rains in eastern Australian wheat areas have reached torrential proportions in some areas which continues to devastate the wheat quality outlook. Some analysts are looking for as much as 60% of this year’s record Australian wheat crop to be reduced to feed quality versus normal levels of 5-10%. This is considered the major supportive factor in the wheat market going into the end of the year since that crop is now being harvested and there is little chance of a turnaround. The USDA will issue its latest monthly supply and demand estimates on Friday. Traders are looking for a reduction of up to 10 million bushels in the USDA’s all-wheat US ending stocks estimate from 848 million bushels on their November report. There will not be a projection of the current US winter wheat crop until spring, and the quality issues related to rains in Australia will likely not show up on the report. In fact, the USDA may raise its Australian production estimate from 24.0 million tonnes in November. Australia’s crop agency ABARE recently raised its estimate to a record 26.8 million.

Bron: CME