March wheat was down 2 cents late in the overnight session after trading as much as 6 cents higher. Outside market forces look slightly negative this morning with a firm tone to the US dollar and weakness in metal and energy markets. A dry trend for the plains and strength in the other grains due to weather issues in South America were the key factors supporting the strong rally off of the mid-December lows. The lower close for July KC wheat after first seeing a surge to the highest level since November 9th is seen as a negative technical development. March wheat posted the highs of the day early in the session yesterday at 670 3/4 and closed a bit higher on the day but at 657. The market gave back all of the early gains before seeing a late bounce. Talk of improving weather in the plains helped spark selling and a lower close on the day for Kansas City wheat after the early bounce. The mostly hot and dry forecast for Argentina over the next few weeks plus bullish outside market forces helped to support the sharp rally early. Weekly export inspections, in the report released during the session yesterday, came in near trade expectations at 13.359 million bushels. Shipments need to average 15.15 million bushels per week to reach the USDA forecast for the season. Season to date exports have reached 596 million bushels as compared with 656 million last year by this date. Wheat specific news was slow and a lack of selling interest helped to support the market early, but the market set back well off of the early highs into the close. The COT reports as of December 27th showed non-commercial traders were net short 44,156 contracts, a decrease of 11,366 contracts for the week. The short-covering trend is seen as a short-term positive force.
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