U.S. grain markets were closed overnight for the 4th of July holiday. The wheat market will resume normal hours as of the 9:30 CST open. The opening call for wheat is supportive as November Matif wheat traded 2% higher, posting another new high for the move this morning. Outside markets were mixed overnight but have since turned positive following the announcement by the Bank of England to launch another round of monetary stimulus and because of the surprise Chinese deposit rate reduction. Crude oil was higher as of 6:30 am and the U.S. Dollar was trading sharply higher. There were 162 reported deliveries made in Chicago wheat as of July 3rd, bringing the month to date total to 332. The wheat market continues to find support from ongoing Midwestern U.S. weather problems and concern over the new crop corn yield. Short covering by funds remains active as corn drags wheat higher and the outlook for more world production cuts is adding to the positive tone of the market. The U.S. weather forecasts continues to lend support to wheat with the 6-10 day maps showing better rainfall for the Delta and Southeast but accumulation is expected to be minimal. The rainfall for the Midwest during this period is scant, with the best showers reaching Wisconsin and Minnesota. Weather models disagree over temperatures as one shows a cooler pattern while the other suggests above normal temperatures. The 11-15 day map shows a better chance for rain in the Delta and Midwest but confidence is extremely low at this point in time. Black Sea weather looks drier over the next two weeks, centered on the spring wheat areas. A third of their spring wheat crop is expected to see yield deterioration. The soft wheat harvest in France continues, but recent rainfall and a wetter forecast this week could mean further quality loss. Wheat, like corn, is beginning to see a disappearance of demand as major importers cover needs through non-traditional channels like India, who is expected to export nearly 4 million tonnes in 2012/13. Bulgaria is also expected to export more wheat this year after production will likely exceed 4 million tonnes. Jordan canceled their tender for 100,000 tonnes of wheat after domestic Russian prices surged earlier this week. Jordan will reissue their tender on July 11th. Libya bought 50,000 tonnes of optional origin wheat Wednesday. Russia was the favorite to win this business but was unsuccessful, further demonstrating the lack of confidence in the Black Sea's wheat production for the new crop year and their nearby supply tightness. Paris Matif wheat futures rose nearly 2% overnight as traders position themselves against a higher U.S. open. Taiwan bought 44,250 tonnes of U.S. milling wheat. The trade will likely push this news aside given the volume and buyer. The U.S. is expected to benefit from lower world production levels and the long term outlook looks positive for U.S. exports. The short-term outlook for Chicago wheat remains overbought but continued higher trade in the corn market will trump any decrease in wheat demand for the moment. The trend remains upward but contingent on the direction of the corn market.
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