The wheat market saw a significant pullback overnight on profit taking, but the complex remains extremely overbought at current levels. Outside markets are offering a slightly negative tone to commodities this morning after the monetary actions by the PBOC and ECB yesterday. Crude oil is trading $1.50 lower and the U.S. Dollar is slightly higher. There were no reported deliveries made in Chicago wheat as of July 3rd, bringing the month to date total to 332 deliveries. The music stopped for wheat overnight after corn bulls decided to take profits ahead of the weekend and next Monday's crop condition reports. The market has retraced nearly all of its gains from yesterday. Overnight, a farm office in France estimated their soft wheat crop could rise almost 6% to 35.9 million vs. 34 million tonnes in 2011. Recent wetter conditions in France could create quality problems in the next 2 weeks. Iraq tendered for 50,000 tonnes of wheat overnight but has since canceled the tender after making no purchase. Some traders believe there was no purchase due to sharply higher prices; others feel it was for technical reasons. Regardless, this is the second tender this week out of the Middle East where no purchase has been made, and bulls should take notice of this fact. Egypt, the world's top importer of wheat, has not tendered for some time now and will likely use its domestic supply until price levels ease around the world or until they are forced to come to the market. While typically the Black Sea is an aggressive exporter at this point in the season, soaring domestic prices and questionable production have kept them on the sidelines for now. Russian wheat production estimates have now reached nearly 47 million tonnes, which if true, would leave them in a precarious position as they attempt to stem domestic inflation but try to keep hold of Middle Eastern customers. The 2010/11 production for Russia was 41.51 million tonnes and exports reached 3.98 million tonnes. Current USDA projections peg Russian production at 53 million tonnes and exports at 16 million tonnes. At current USDA levels, Russian production and export potential is overstated and revisions are likely on the next WASDE report. This should be supportive to U.S. and European wheat markets over the course of 2012/13 crop year. Furthermore, the current USDA forecast for wheat production in Australia is 26 million tonnes which is down from 29.50 million tonnes in 2011/12. Warm and dry weather conditions in Australia could accelerate if the El Nino develops, giving way to potentially greater declines in Australian wheat production. As Asian buyers look to feed wheat as a substitute for corn, the U.S. might find itself in a competitive position to penetrate new markets, which could be supportive to wheat long term. While the fundamental supply or demand picture for global wheat is not at a critical stage at the moment, lower production for key global exporters and a stronger long term demand outlook could give way to further tightening in global carryout from it's current level of 185.76 million tonnes.