May wheat was trading 2 1/4 cents lower late in the overnight session. Outside market forces look bearish this morning with a jump in the US dollar and weakness in metal and equity markets. Open interest has come down on the recent jump in prices and traders suspect that short-covering was a large part of the recent buying strength. Burdensome US and world ending stocks plus the outlook for even higher stocks for the 2012/13 season remain as negative forces. May wheat closed lower on the session yesterday after choppy and two-sided trade. The weakness in corn and mixed trade for the US dollar clashed with higher trade for soybeans and positive action for equity markets to keep the trade choppy. Ideas that the market was a bit overbought after the three-day rally plus a firm tone to the US dollar helped to pressure early. However, talk that the winter wheat crop may be coming out of dormancy too early plus ideas that the western and southern sections of the winter wheat belt are not seeing enough rain in the forecast helped to support a rally to higher on the day into the mid-session. Minneapolis wheat fell sharply last week but closed higher for the 4th session in a row yesterday. Weekly export sales came in at 414,100 metric tonnes for the current marketing year and 95,000 for the next marketing year for a total of 509,100 which was lightly below trade expectations. As of February 23, cumulative wheat sales stand at 90.1% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 86.7%. Sales of 186,000 metric tonnes are needed each week to reach the USDA forecast. On top of the weekly sales, private exporters reported the sale of 120,000 tonnes of US hard winter wheat to Iran for the 2011/12 season. This sale will need approval from the Treasury Department. The European Union granted export licenses for 429,000 tonnes of wheat this week which pushed the cumulative total for the 2011/12 season to 9.1 million tonnes as compared with 13.8 million last year by this date. Traders see lower production in Australia for the 2012/13 season as producers shift to other crops such as canola and barley. Many traders see a drop of 15% from this year's record high. Russia's Agricultural Minister expects wheat production for the 2012/13 season to increase to near 57 million tonnes from 56.2 million tonnes this season. Russia is expected to export 1.5-2.0 million tonnes in March. There were 3 deliveries of wheat which brings the total for the month to 6.
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