March wheat was down 8 cents late in the overnight session. Outside market forces look slightly negative this morning with a firm tone to the US dollar and weakness in equity markets. Traders seem to be waiting for the fundamental news which might be released to help explain the sharp rally in wheat values in the past few weeks, but the news has yet to materialize, and many traders see the market in a short-term overbought condition. Just when it seems that Russian exporters are slowing down, increased availability of wheat from Argentina and Australia has helped to keep demand for US wheat sluggish. While production in Europe was decent this season, they are also having a difficult time competing on the export front. As a result, the higher trade in the US dollar is seen as a negative force. The EU granted export licenses for 136,000 tonnes of wheat this week, which pushed season-to-date exports to 7.26 million tonnes, which is down 35% from last year's pace. March wheat closed 7 cents lower on the session yesterday, and with the overnight break, the market is already down as much as 29 1/4 cents from Tuesday's highs. A strong US dollar and choppy trade in the other grains helped to pressure. Early weakness in energy and equity markets yesterday added to the negative tone, but as outside markets recovered, wheat did not. Talk of the overbought condition of the market plus talk of the weak technical action in Kansas City this week helped to pressure. In addition, news of improving crop conditions for the winter wheat crop and ideas that planted area may have expanded this season helped to pressure as well. Kansas crops at the end of December were rated 53% in good to excellent condition, compared with 47% last month. Oklahoma was 63% good to excellent as compared with 56% last month, and Texas was 25% good/excellent, which was unchanged from last month. Romanian wheat production for 2011 came in near 7.2 million tonnes, up 24% and the largest in six years. The dry trend for the southern plains in the US for the extended weather models is seen as a slight positive.
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