December wheat was up 14 1/2 cents late in the overnight session. Outside market forces are positive today with strength in the global stock markets and a sharp break in the US dollar overnight. The turn up in gold, silver and crude oil are also supportive forces. The COT report on the weekend showed a hefty net short position held by fund traders as of last Tuesday, and the market fell as much as 63 1/2 cents since then, so traders beleive the market has reached an extremely oversold condition. The September 1st Grain Stocks report on Friday may show the impact of higher than expected wheat feeding for the first quarter of the marketing year, and the Small Grains Summary, which will also be released on Friday, will give traders a better production estimate, with the focus on spring wheat production and yield. Bulls are monitoring the planting and early growing conditions for the winter wheat crop. The weekly Crop Progress report showed that just 26% of the winter wheat crop was planted as of sunday, compared to 14% last week and 32% last year. The 10-year average for this time of year is 37%. Historically, the lowest plantings for this time of the year was 23% in 2000. With high insurance coverage, producers have the incentive to get the crop in the ground, but traders see the need for significant rains in the weeks just ahead to get the crop off to a decent start, and this does not seem to be in the forecast. Texas is just 14% planted against 34% on average, and Oklahoma is 11% planted versues an average pace of 31%. The report also showed 96% of the spring wheat crop was harvested, compared to 93% last week and 89% last year. Traders are also concerned with dryness issues in Ukraine. December wheat closed higher on the session yesterday with an outside trading day after the market first moved to its lowest level since July 2010. Talk of a drier trend for the central and southern plains for the next few weeks plus continued talk of the oversold technical condition of the market lent support. News of rain possibilities starting on Wednesday for dry areas of Argentina may have helped limit the advance. A recovery in outside market forces plus a surge higher in corn lent support. Weekly export inspections, released during the session yesterday, came in at 21.6 million bushels, which was near the lower end of expectations. Export shipments need to average 18.3 million bushels each week to reach the USDA projection for the year. Cumulative shipments have reached 36.3% of the forecast for the season as compared with the 5-year average of 34.8%. Rain in the forecast for the next few days for eastern Australia is expected to improve the outlook for winter crops. Australia wheat stocks fell in August to 9.8 million tonnes, but this is still up 46% from last year.
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