December Chicago wheat is trading 1 cent higher near 7:00 am CST. Kansas City wheat is slightly lower while Minneapolis wheat is posting moderate gains. There were 67 September Chicago wheat deliveries overnight bringing the month-to-date total to 885 contracts. The November Matif Milling wheat contract is trading 1.50 Euros lower. Wheat is recovering following yesterday's losses just ahead of the USDA report.

This morning's USDA report will be focused largely on international production, the US corn yield/production, and signs of increased feed wheat usage. The market is expecting a cut to Russian production near 40 million tonnes but 38 is not out of the question. The August estimate for Russian production was 43 million tonnes. Australian wheat production will likely be slashed to 23-24 million tonnes which is down from 26 in August. The trade believes global ending stocks for 2012/13 could be near 174.5 million tonnes vs. the current USDA estimate of 177.17. World domestic feed demand increased in the August report from 130.33 to 134.09 million tonnes. Wheat volume yesterday was only 65,842 contracts and open interest saw light losses with the lower trade. December Chicago wheat continues to hold within its recent trading range, waiting for the corn market to make a considerable move up or down. News that Egypt bought a round of wheat from Black Sea and French origins was supportive after prices rose on the tender. US wheat remains uncompetitive for most Middle Eastern origins and it was announced that France will likely export 9 million tonnes of soft wheat this season which is up from 8.4 in 2011/12.

Egypt announced that they would buy 235,000 tonnes of wheat from Ukrainian, Russian, and French origins. The shipment period for the wheat was early November and price spreads between French and Black Sea wheat narrowed again. French wheat was close to a $20 premium to Black Sea origins just a few weeks ago. However, the offers indicated that French wheat was bought at a $10 per tonne premium to Russian and a $4 per tonne premium to Ukrainian. Egypt has bought nearly 1.485 million tonnes of wheat, mostly from the Black Sea since August 1st. There were no US offers in the tender.

Soil conditions in the western plains remain drier than normal but planting has commenced. Storm systems are tracking across Nebraska this morning which should help planting conditions once corn and soybeans have been harvested. Another wave of precipitation is expected in the southern plains and Midwest Thursday and Friday. Accumulation was lowered and is expected to be just.10-1 inch, however anything will do at this point.

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