May wheat was trading 2 3/4 cents higher late in the overnight session. Outside market forces look somewhat positive today with a weak US dollar and solid gains in equity markets overnight. Trend-following fund traders (non-commercial less index funds) held a net short position ff nearly 89,000 contracts as of April 10th and more selling appears to have occurred since. This leaves wheat in a very oversold condition and vulnerable to bouts of short-covering. US wheat looks competitive on the world market and the market seems somewhat sensitive to weather developments. Traders see more cold weather for the eastern Corn Belt for the coming weekend and the crop is advancing enough to be more vulnerable to freezing conditions. Traders will monitor crop progress in tonight's report. May wheat closed moderately lower on the session yesterday and experienced the lowest close since March 29th and the second lowest close since January 18th. July KC wheat closed sharply lower on the day and moved to the lowest level since July of 2010. New crop KC wheat is already down as much as 70 1/2 cents off of the April highs as improving weather remains a negative force. The early selling yesterday pushed the market lower and futures saw choppy to higher trade for much of the day until late selling drove July wheat sharply lower and to new lows of the day late in the session. More good rains over the weekend for the central plains and ideas that US and European wheat conditions are improving helped to pressure. A fire in the USDA building caused weekly export inspection data, winter wheat progress and condition reports and spring wheat planting progress reports to be delayed. Late yesterday, weekly export inspections came in at 25.745 million bushels which was sharply above trade expectations. Export shipments need to average just 19.2 million bushels per week to reach the USDA export forecast for the season. Slower China growth was seen as a negative force for commodity markets in general and funds were noted as sellers again for the weekend COT report. More talk of high yield potential for the winter wheat crops was seen as the primary bearish force.
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