December Chicago wheat is trading 2 cents higher near 7:30 am CST. Kansas City and Minneapolis wheat are slightly higher as well. There were 37 September Chicago wheat deliveries overnight bringing the month-to-date total to 818 contracts. The November Matif Milling wheat contract is trading 1.50 Euros lower. December wheat managed marginal gains overnight after Australian's wheat production was cut by a government agency and on a lower US Dollar. European equity markets fell for the second straight day but energies and metals traded stronger in the US as investors look ahead to this week's FOMC meeting where it is widely expected a new stimulus program will be announced.

Wheat planting has been underway for the last week or more and the weekly Winter Wheat Planting report showed 4% complete in their first report of the planting season vs. 5% last year. The 10 year average for this time of year is 8%. The slower than average pace of planting could be linked to drier than normal soil conditions in the west. Updated topsoil moisture ratings show increases in short/very short conditions for major Hard Red Winter Wheat states like Kansas, Nebraska, Oklahoma, and South Dakota. Soil moisture condition ratings improved for Soft Red Winter wheat states in the eastern Corn Belt and Southeast. The weather outlook looks warm and dry for most of this week in the west but there is a chance for rainfall beginning on Thursday and Friday. Conditions should be monitored.

Australia remains drier than normal and the Australian government agency, ABARES revised their production forecast down to 22.5 million tonnes vs. 24.1 million tonnes previous and 29.5 in 2011. The cut is in line with market expectations and most expect the USDA to slash Australian production by 2-3 million tonnes tomorrow vs. their current estimate of 26 million tonnes. Significant rainfall will be needed by the end of September or the crop could be at risk of sliding another 10%.

Egypt announced another tender after the market closed yesterday for an unspecified amount of wheat for November 11-20 shipment. Results of the tender should be known later today and the market expects Black Sea offers to rise once again, given the shipment period and tight supply outlook heading into the winter. French origin wheat could be next in line to do this business if Black Sea prices become uncompetitive. Ukraine exports are set to fall sharply beginning in November of this year. August exports were recorded at 824,000 tonnes last month but exports are only expected to be 50-100,000 tonnes a month beginning in November. Ukraine agreed with trade unions to limit exports to 4 million this crop year due to lower than expected production.

The recent flooding in Argentina could slash production. The USDA's current estimate is at 11.50 million tonnes which was down from 12 million tonnes in July. If the USDA were to cut Argentina production by a half a million tonnes due to the lost acreage, it would only be the second time in the last 17 years that production reached 11 million tonnes.

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