March wheat was up 5 1/4 cents late in the overnight session. Outside market forces look positive today, as the US dollar has turned sharply lower and metal, energy and the US stock markets look to start off strong today. There were 440 deliveries against the December contract for first notice day. The market moved from lower to higher overnight, as news of an interest rate cut in China and the sharp drop in the US dollar lent support. A speculative short-covering trend emerged yesterday to help drive March wheat to its highest level since November 17th. Improving winter wheat crop conditions did not seem to have much impact, as the focus instead was on the extremely oversold condition of the market. A rally in global equity markets and further weakness in the US dollar lent support the market early in the session. The Commitments of Traders reports as of November 22nd showed the combined spec and fund position at a new record net short level of 82,964 contracts. Traders believe this leaves wheat vulnerable to short-covering support if resistance levels are violated. Tunisia is tendering to buy 50,000 tonnes of durum wheat. Argentine officials approved the export of an additional 2.7 million tonnes of wheat for the 2010/11 season. Traders see Russian grain production next year as high as 97 million tonnes, compared with 92 million tonnes this year. Winter grain production could reach 45.5 million tonnes, up from 34.7 million. Traders, however, see a 3-5 million tonne loss in Ukrainian winter production due to poor weather, and these losses could increase if the winter weather is poor. Too much rain in the Australian harvest may also tighten the supply of higher quality wheat on the world market.
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