July wheat was trading 3 cents lower near 7:30 am cst. Outside market forces look slightly positive overnight but gains in US equity markets have diminished and the dollar is only slightly lower. The market has given back more than half of the gains from the mid-May rally as increased harvest pressures, slower than expected export demand and a slowdown in feeding demand with corn now cheaper than wheat seen as negative forces. Black Sea weather has improved in recent days to help pressure as well but the outlook is turning drier and a strong crop recovery appears less likely without more rain. Ukraine wheat production is expected at near 12.0-12.5 million tonnes from 22.3 million last year. July wheat closed moderately lower on the session yesterday but well up from early lows. The break pushed the market to the lowest level since May 17th. A jump in the US dollar plus weakness in other commodity markets helped to pressure as traders see favorable weather for the spring wheat crop and harvest selling pressure. The deteriorating crop conditions for the winter wheat crop into the harvest helped to limit the decline. Kansas crops are rated 39% good to excellent from 43% last week. News of more rains this week for Russia plus indications of a hefty supply of exportable surplus from Russia this year in spite of dryness added to the negative tone. Iraq has tendered for 50,000 tonnes of wheat. The Ukraine Agriculture Minister indicated that the grain harvest for 2012 could be near 50 million tonnes, the third largest of the past 20 years. This, however, includes a major jump to record highs for corn production. The winter wheat harvest is on a record fast pace and harvest selling pressures are also a concern. India's Food Minister indicates that the country will only consider wheat exports from stocks after July when prices might strengthen on global shortfalls.
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