May wheat was trading 4 1/2 cents higher late in the overnight session. Outside market forces look slightly positive today. Most of the news flow for wheat continues to hold a bearish tilt but funds have been active buyers in the past few sessions and this has helped to provide solid support for the strong rally. Traders remain somewhat concerned over possible cold weather damage for parts of Europe. The USDA attache in India expects to see record wheat production this year for the fifth year in a row at 87.5 million tonnes. May wheat closed sharply higher on the session yesterday and near the highs as improving macro-economic sentiment and carryover support from corn and the soybean complex helped to lift prices far above the trading range of the past 21/2 weeks. News of fairly large snowfall totals for parts of the Northern Plains, as well as ideas that Russia could remain an active exporter on the world market did not lead to selling pressures and fund short-covering emerged to support. A moderate sell-off in the US dollar added to the positive tone. The Commitments of Traders reports as of February 21st showed trend following fund traders (non-commercial less index funds) net short a record 97,259 contracts. May wheat closed at 636 3/4 on February 21st and pushed to as high as 673 3/4 overnight. Most traders expected zero deliveries of wheat on first notice day today but deliveries came in at 3 contracts. There were a few who expected up to 200. Variable storage rates are seen as attractive and this has kept demand firm for warehouse receipts.
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