December wheat traded 2 1/2 cents higher overnight. The US Dollar was lower overnight.

Wheat traded lower yesterday with many traders crediting the declines to a sharply higher dollar and a general decline across the commodity market sector. In addition, rains in the forecast for Australia and Argentina helped pressure. A lower dollar overnight may have provided some support coming into today's open. In general, though, wheat is showing a clear reluctance to move higher, and private crop estimates from Europe compounded the problem by adding millions of tonnes of wheat to the already record world supply for 2008/09 this week. On the demand side, Turkey is tendering for 250,000 tonnes of wheat, including 50,000 tonnes of soft wheat. They are also tendering for 50,000 tonnes of durum. More evidence of the return of monsoon rains in India during August can be seen from recent severe flooding in eastern India. Floods there have destroyed 250,000 homes and resulted in food riots as relief has been slow getting to affected areas. Importing countries such as Pakistan may see this as another reason to solidify strategic reserves of wheat and other key food commodities. Basis levels have remained weak at the Gulf due to continued large US supplies of soft red wheat and a willingness of producers to sell. This stands in contrast to what appears to be a tight farmer holding mentality in soybeans and corn. The Gulf basis for soft red has dropped by 35-40 cents over the past two and a half weeks.

The eastern spring wheat belt should see showers today and tomorrow, temporarily slowing the recent rapid pace of the spring wheat harvest. Turkey is tendering for 250,000 tonnes of wheat including 50,000 tonnes of soft wheat. They are also tendering for 50,000 tonnes of durum. Syria is in the market for 120,000 tonnes of soft wheat from any origin.