July wheat was trading 16 1/4 cents lower near 7:30 am central time. Outside market forces look very weak again today with a stronger US dollar and weakness in other key commodity markets. With 100 degree heat and dryness across the central and western winter wheat belt this weekend, traders see the potential for further damage to yield for northwest Kansas and north into Nebraska and Colorado. The heat will help push fields to the south of this region to full maturity and ready for harvest. Forecasts for rains in part of the dry areas of Russia and in the US plus the bearish tilt to outside market forces helped to drive the market lower overnight. Traders see increased harvest selling pressures ahead and a lack of potential tightness into the harvest as negative forces. The market sold off fairly sharply yesterday led by more active fund trader selling. Rumors of China canceling corn and soybean cargoes could not be confirmed by commercial traders but fund traders were aggressive sellers in many commodity markets on news of iron ore and coal cancellations. Improving weather also hit the other grains and this bleed over to the wheat market to pressure. While the weekly crop updates showed a sharp drop in Kansas crop ratings, traders believe that the current rally already priced-in the weather. Outside market forces plus the overbought technical condition of the market were seen as reasons for the selling. The US dollar is higher again this morning and moved to the highest level since January 17th and there is some rain for the dry areas of Russia. The weekly Spring Wheat Planting report showed a record fast 99% of the crop is planted compared to 50% last year. The crop is 74% rated good/excellent and traders see continued moisture in spring wheat areas just ahead which should help keep crop conditions favorable.
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