December wheat was down 4 cents late in the overnight session. Outside market forces look negative this morning with a strong US dollar and some weakness in energy and equity markets. Wheat followed the other grains lower last week, but the steep drop in spring wheat production from expectations and threatening weather for the winter wheat crop ahead are factors that sparked buying in Minneapolis and slowed the selling trend in Kansas City. Traders had hoped to see better signs of wheat feeding demand in the reports, but this was not the case. December wheat closed 45 cents lower for the session on Friday and closed down 31 1/2 cents for the week. Minneapolis wheat was down just 3 1/4 cents for the session Friday and closed up 41 1/4 cents for the week. Production news was somewhat supportive, but higher than expected wheat stocks and bearish news for corn helped to drive the market sharply lower on Friday. Minneapolis wheat's losses were half of Chicago's early, as spring wheat production came in even lower than expected. Traders were looking for spring wheat production near 493 million bushels, but the USDA came in at 462.5 million, which was considered supportive. Other spring wheat harvested acreage was adjusted down 173,000 acres from August estimates, and yield was adjusted down to 38.3 bu/acre, which was down 4.2 from August. As a result, all wheat production was pegged at 2.008 billion bushels, which was 36 million below trade expectations and down from the previous estimate of 2.077 billion. However, September 1st stocks came in at 2.15 billion bushels, which was 115 million bushels above trade expectations, and this more than offset the lower yield. The report suggests that wheat feeding was not as high as expected. Better weather for late in the season has traders expecting higher wheat production estimates for Canada's production report this week. In addition, a rally in the US dollar and continued global economic concerns added to the bearish tone. Russian wheat prices have been down for three weeks in a row, as Russia has continued to undercut the competition for key pieces of business such as Egypt. European wheat futures were down again overnight, to their lowest level in nearly a year. The Commitments of Traders reports as of September 27th showed non-commercial traders were net short 50,057 contracts, an increase of 11,670 for the week. The selling trend is seen as a short-term negative force, but traders also see an oversold condition from the report. Trend-following fund traders held a net short position of 74,639 contracts as of Tuesday, and traders believe that more selling since Tuesday has caused a record net short position. The old record from June of 2010 was 77,446. Commodity index traders held a net long position of 195,252 contracts, down 3,036 contracts for the week.
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