March wheat was down 12 cents late in the overnight session. Outside markets look weak. News that milling wheat futures in Europe were down 1.57% overnight combined with the slow pace of US exports helped spark the weakness in the US futures overnight. While weekly export sales report yesterday indicated wheat sales fell to a 10 1/2 month low last week and there were revisions higher for the Argentina crop size, the wheat market managed to stay strong into the close of yesterday's session. Still, the market did give back nearly all of yesterday's gains overnight. Ideas that European stocks are tightening and that the sharp break in the US dollar could spark increased interest in US wheat has helped to provide underlying support, but traders appear to be frustrated with the slow pace of exports so far, and there is talk that the Australia crop losses are already priced. Talk that buyers are getting more active due to inflationary fears helped to support the market yesterday, but the news of tightening measures by China overnight and indications from a senior official of the UN Food and Agriculture Organization that the situation this year is not as tight as 2008 helped to ease food inflationary concerns. The Buenos Aires Grains Exchange indicated that the wheat crop in Argentina will come in around 15 million tonnes, up from their previous estimate of 14.5 million tonnes. This estimate compares with the USDA estimate this week at 14.0 million tonnes. Concerns for tightness of higher quality wheat on the world market plus a surge higher in corn helped to support solid gains for the wheat market yesterday. Weekly export sales for US wheat came in below trade expectations at 147,300 metric tonnes for the current marketing year and 27,900 for the next marketing year for a total of 175,200. Cumulative wheat sales stand at 74.0% of the USDA forecast for 2010/11 marketing year versus a 5 year average of 76.4%. Sales of 440,000 metric tonnes are needed each week to reach the USDA forecast. The European Union granted export licenses totaling 675,000 tonnes for the week, which pushed cumulative sales for the season to 11.9 million tonnes, up 31% from last season. Inflationary concerns and reluctance by India to allow exports added to the positive tone yesterday, and the falling US dollar was also seen as supportive, but some traders pointed out that Pakistan is exporting wheat for the first time in three years with sales near 500,000 tonnes this wee. They see exports of close to 2 million tonnes in the next few months.
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