December wheat was 1 1/2 cents higher overnight. The dollar index was lower. Deliveries against the July contract were 2,420 contracts today with the total for the delivery period now at 5,285.

Wheat surged yesterday despite the release of two USDA reports that traders viewed as negative to wheat prices. Traders credited the strength in wheat to short covering following a massive surge higher in corn. Funds were buyers in wheat and this led to ideas that trend-following funds might start to aggressively cover their very large net short position. The latest Commitments of Traders report showed those traders net short by nearly 67,000 contracts which is by far the largest net short position held by the trend-followers in any agricultural commodity market.

Yesterday’s reports from the USDA pegged US all-wheat stocks as of June 1st at 973 million bushels, more than 30 million bushels above trade expectations. This number becomes the new ending stocks estimate for the 2009/10 crop marketing year. Last year’s June 1st stocks stood at just 657 million bushels. Planted acreage was also above trade expectations for wheat due to higher than expected totals for spring and durum wheat.

Spring wheat acreage was pegged at 13.907 million, more than 150,000 above trade expectations, and durum was about 300,000 above expectations at 2.675 million. Traders had expected wheat acreage in the northern Plains to be down due to wet weather during the planting season. The spring wheat and durum totals helped push all-wheat acreage to a higher-than-expected total of 54.305 million acres.

Weather looks to remain dry in all harvest areas into the weekend. Some scattered showers may sneak into the central Plains on Sunday with a flurry of heavy rains possible in Nebraska and northern Kansas. In contrast, the Midwest looks to remain almost entirely dry into Sunday with the exception of some light to moderate rains in Missouri and Iowa into Sunday. A South Korean flour mill bought 25,200 tonnes of US wheat for Sept-Oct delivery.
Bron:cme