December wheat was up 10 cents late in the overnight session. Outside market forces look positive today with weakness in the US dollar and strength in energy and equity markets. The rainy outlook for the southern plains and bearish outside market forces were enough to pressure the wheat market yesterday. Open interest is up by nearly 20,000 contracts in the last month, as fund traders have built a hefty net short position, according to the COT reports. This leaves the market vulnerable to short covering if resistance levels are violated. European milling wheat futures were higher overnight, and this lent support, but other short term news is slow. Iraq is tendering to buy at least 50,000 tonnes of wheat. Egyptian officials have indicated that they have 2.8 million tonnes of wheat in storage, which is close to a 4-month supply. December wheat saw its lowest close since June 30, 2010 yesterday and saw almost exactly the same range as Monday. An improved weather outlook plus continued macroeconomic concern,s which pressured commodity markets in general, helped to pressure wheat. Another run higher in the US dollar and weakness in energy and equity markets helped to pressure the market early, and the selling intensified into the mid-session. The surge in the US dollar makes US wheat even less competitive than other key exporters, and this helped spark some selling. In addition to outside market forces, talk of more rain in the forecast into and during this weekend for the central and southern plains helped to pressure prices. Weather models are showing 1-2 inches possible in many of the southern plains wheat growing areas, and this could help boost planting progress. The Canadian production update yesterday was a slightly supportive factor, as all wheat production was pegged at 24.2 million tonnes, which was up 4.3% from last year but down from trade expectations near 24.4 million tonnes.
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