December wheat was down 9 1/2 cents late in the overnight session. Outside market factors look negative today, as European debt issues have renewed concerns for global economic conditions ahead. Sharply higher trade in the US dollar with a move to the highest level since early August helped to pressure. September wheat deliveries came in at 92 contracts this morning, which pushed month-to-date deliveries to 3,362. The wheat market continues to follow the corn market, and traders await US production news at the end of the month and the USDA supply/demand update for Monday. Some rains for the southern plains helped to pressure prices, and a jump in the US dollar overnight does not help. The surge in corn was enough to support the wheat on Friday, but the December contract still closed lower on the week after trading to its highest level since June 14th to start the week. The rally came despite a jump in the US dollar and weakness in energy and equity markets. The expanding drought conditions in the US southern plains and concerns for the dry start to the Argentine wheat growing season were factors helping to provide underlying support. A few weeks ago, traders saw Russian wheat prices for exports on the rise as a positive force, even though Russian offers were well below other key exporter offers. However, there are some growing concerns that Russia, Ukraine and Kazakhstan will begin to compete for business and that flat price offers will slide. Russia exported 5.8 million tonnes of grain in the first two months of the season (2.6 million July and 3.2 August), and exports for the marketing year are expected to be 25 million tonnes with production near 90 million tonnes from 60.9 million last year, according to the Russian Grain Union. Ukraine may look into removing export dutiesn as exports have already been slower than expectedn and there could be an announcement today on this issue. The Commitments of Traders reports as of August 30th showed non-commercial traders were net short 3,961 contracts, a decrease of 13,337 for the week. Non-commercial and nonreportable traders combined held a net short position of 27,463 contracts, a decrease of 12,282. The aggressive short-covering trend is seen as a short term positive force. Commodity index traders held a net long position of 206,788 contracts. This represents an increase of 1,592 contracts in the net long position held by these traders.
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