March wheat traded 10 1/2 cents higher late in the overnight session. Outside market forces look positive today with a weaker US dollar and strength in energy and equity markets. With fund traders holding a near record net short position, the positive outside market forces and concerns about winterkill damage in the Black Sea region may have a stronger than normal impact on pricing. In other words, if outside market forces are encouraging new long positions but funds are still holding a higher than expected net short, buyers could be aggressive. March wheat closed just slightly lower on the session yesterday and well up from the early lows. The firm Dollar and weakness in soybeans kept pressure on the market but a recovery in the stock market, metal markets and the lack of aggressive fund trader selling after the early break helped to support the recover. Weekly export inspections came in at 18.6 million bushels which was in the range of expectations and compares with an average of 16.5 million necessary each week to reach the USDA estimate for the 2011/12 marketing year. Improved weather for South America helped to pressure the other grains and this added to the negative tone for the wheat market. Cold weather over the weekend in the Black Sea region may have helped to provide some underlying support. In addition, the COT reports showed that fund traders hold a larger than expected net short position. This may have helped to limit the selling. Kansas winter wheat conditions declined in the past month due to dry and warm weather. The crop is now rated 49% good to excellent from 27% last year at this time. Texas conditions improved for the past week due to good rains. Only 24% is rated good to excellent. The USDA attache in Australia reported record high wheat stocks and expects record exports after two good crops in a row. Traders still see a new record high crop in India this season as well. Russia's deputy Ag Minister indicated that the country is considering a protective grain export duty to help slow grain exports which are on a record pace. European wheat was up more than 2% overnight on worries of cold weather damage to the crop.
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