December wheat traded 16 1/4 cents lower overnight.

Wheat staged a very sharp rally yesterday with traders reporting buying by all sectors of the market, including continued buying in wheat by spreaders against short positions in corn and soybeans. The overnight session was a different story, with moderate losses capped off by late weakness and a close near the session lows. Traders indicate that the sharp rally in the dollar overnight was the main factor behind overnight weakness, with some traders expressing concern that this could put a damper on the recent surge in export demand for US wheat. The increased demand has been based in large part on the decline in wheat futures according to those traders, and a higher dollar would cancel out some of that newfound price advantage on the world export market. However, this week's Export Sales Report showed that demand for US wheat is still running at a very strong pace with soft red basis levels at the Gulf up 25 to 30 cents this week due to that demand. Net sales on yesterday's report were 682,600 tonnes on this week's Expoort Sales Report, all for the current marketing year. Total sales to date stand at 46.4% of the USDA forecast versus a 5 year average of 32.2%. This week's sales were heavily weighted toward hard red wheat which accounted for 501,900 tonnes of this week's total compared to 91,900 tonnes for soft red. This reverses the pattern of the previous week. Iran, Nigeria and Mexico were the biggest buyers overall.

US weather is only a minor factor in spring wheat at this point. Some improvement is expected in eastern Australian wheat areas due to further scattered rains this week. Scattered rains are expected to move from west to east across most of the spring wheat belt from Sunday through Tuesday. Taiwan is tendering for 44,640 tonnes of US wheat. Pakistan is in the market for 250,000 tonnes of wheat. Japan bought 90,000 tonnes of wheat on its regular weekly tender. Jordan is again tendering for 100,000 tonnes of wheat. Algeria is tendering for 50,000 tonnes of wheat.