March wheat was up 5 1/2 cents overnight. The dollar was higher. Deliveries against the December wheat contract were 259 contracts with the total for the delivery period to-date at 15,646. More rain in Australia again yesterday leaves the crop in deteriorating condition and the lack of higher quality milling wheat appears to be the main foundation for the recent rally. While the heavy rains may end this weekend, traders indicate that the damage has been done and this could result in increased demand for US wheat on the world market. Egypt is tendering for optional origin wheat with a possible announcement this morning and Tunisia is tendering to buy 67,000 tonnes of milling wheat. Iraq has bought 250,000 tonnes of US wheat from three companies. France has exported 6.7 million tonnes of wheat in the first four months of the season which is up 23% from last year’s pace. March wheat traded as high as 811 on Tuesday before a reversal and weak close and saw follow-through selling to as low as 766 1/4 yesterday before finding support. The market recovered from these lows to close fractionally lower yesterday. This came on a day of mixed trade in commodity markets. The dollar was higher and traders credited the weakness to this factor. Traders said that a rally in European wheat markets and ongoing concern over wet weather and quality issues into the start of the wheat harvest in Australia continue to support the wheat market. Sources in Australia indicate that up to 60% of the crop in the crucial SE wheat belt may be reduced to feed quality versus and normal percentage near 5-10%. Traders said that strong gains in corn also brought carryover support but selling by funds and by spreaders versus corn added pressure later in the session. Traders are also looking to this week’s supply and demand report from the USDA on Friday for direction which is expected to show a modest drop in US all-wheat ending stocks for the 2010/11 crop marketing year. Export demand for higher-quality US wheat has been relatively strong this year and the expected quality reductions in Australia come at a time when dry weather has stressed the higher protein US hard red winter wheat crop as it moves into winter dormancy. Forecasts remain dry for the region over the next 10 days.

Bron: CME