September Chicago wheat is trading 8 cents higher near 7:30 am CST. Kansas City and Minneapolis wheat are trading slightly higher as well. Chicago wheat bounced for the second straight night following its sharp decline yesterday. The November Matif Milling Wheat contract traded 2 Euros higher overnight. European markets traded lower with Asia overnight and investors fear the economic contraction in the Euro Zone will continue until further action from the ECB. German Bonds hit a 6 week low overnight as traders fled riskier asset. The US Dollar is trading slightly higher, crude is nearly unchanged, and US Stocks are set to open marginally lower. Chicago wheat was hit with another wave of heavy sell pressure yesterday and the technical charts are offering a bearish tilt this morning. The bounce overnight comes after wheat has seen it's biggest 3 day loss in 13 months. Underlying support is coming from a pickup in domestic feed wheat demand and fears that the global supply will tighten later this year. However, the nearby export demand outlook and weak cash market has ultimately been too much for the bulls to handle. Egypt bought another 120,000 tonnes of Russian and Ukrainian wheat yesterday afternoon. This was their second purchase in the week. Algeria is expected to release the result of their 50,000 tonne milling wheat tender today. The tender lineup could quiet down following this business after every major importer has lined up to buy wheat over the last couple weeks. International importers are concerned with rising coarse grain prices going forward and the potential for lower export volume out of the Black Sea in 2013. A private Russian analyst expects Russian's grain exportable surplus of 10-11 million tonnes to be exhausted by November if the country continues to export at it's current pace. Russia's official estimate is near 10-12 million tonnes. Russian exports are estimated at 2.5-3 million tonnes of grain in August and September. Western Europe harvest has picked up after seeing relief from the heavy rainfall in July. The French harvest is on it's last leg with average to above average yields but quality is questionable. Poor quality wheat will make it's way into feed wheat channels. Quality concerns exist in Germany and the UK as well. Many analysts have trimmed UK yields but this will have little impact on the global balance sheet. Like corn, the US wheat market is having a tough time establishing advances higher as cash markets weaken and exports slow. Purchases of Russian wheat by Egypt this week solidify this argument. The wheat story could take time to develop as the market anticipates a lower export pace by the Black Sea in late 2012 and early 2013. The Australian crop has seen relief in the east but the southwestern portion of the country is trending drier and an El Nino outlook is becoming more of a certainty. If this weather pattern develops, yield stress could become a bigger issue and production estimates could be revised lower from the current USDA forecast of 26 million tonnes.