Looking at the December wheat chart at Chicago it appears the punters are simply squaring up a little ahead of Thursday’s USDA WASDA report. The stochastic indicator shows the punters are approaching neutral  which is generally where the market will trade ahead of these reports unless someone gets the inside running.

Weather concerns are starting to subside in the US corn belt with the ten day map showing conditions should dry out a little and allow the harvest to roll on. The 7 day rainfall model for the US does show the chance of some good rain across much of Kansas which will be viewed as beneficial to the new season winter wheat just sown.
Conditions are also expected to improve across Canada allowing canola harvest to get going again. Wet cold and in some places snowy weather has hindered the completion of harvest again this year. Although conditions don’t appear to be as bad as 2016 things are less than ideal and we may see some reductions to Canadian production in the short term.

Underpinning the market is the expectation that Russia will at some stage reduce wheat exports and the constant decline of production estimates of the Australian crop. The punters expect to see 19mt on the balance sheet this Thursday. Many other analyst are already predicting a much smaller crop than that. The latest Riverina Australia estimate is 17.2mt.