September Chicago wheat traded 21 cents higher near 7;30 am CST on follow through from the corn market. The September contract has been unable to push above last Thursday's highs at 8.40 3/4. Friday's action sent wheat sharply lower, near 8.00, but found support on a positive outlook for the corn market. Kansas City and Minneapolis wheat are both trading sharply higher this morning and the November Paris Matif contract is up 4.25 Euros, nearly 2%. Outside markets are providing a slightly negative tone this morning with stocks trading slightly lower. There were 220 wheat deliveries in Chicago, bringing the month-to-date today to 552 contracts. WHEAT: The wheat market was dragged kicking and screaming higher overnight after corn exploded on the open. Weather patterns and international production concerns continue to fuel the bull camp while leaving the bears helpless at the moment. Friday saw a healthy, profit taking correction but wheat will have no place to go but higher if corn maintains its firmer tone. Weather forecasts over the next 2 weeks should be supportive to corn, providing a solid foundation for wheat bulls. The Commitment of Traders report, released this afternoon, should show funds continue to cover their short positions, and possibly initiating fresh long positions. The Black Sea region remains the key topic being discussed in the wheat market. Drier than normal conditions in parts of Russian and Ukrainian spring wheat territory has likely destroyed yield potential for nearly a third of the crop. Parts of Russia also saw massive flooding over the weekend and have raised concern over the transportation of grain to a key Russian port. Paris wheat rose on news of the flooding as domestic wheat prices in Russia continue to climb. Weekly export sales for the week ending June 28th came in at 418,900 tonnes for the 2012/13 marketing year, which was at the high end of trade estimates. Digging a little deeper into the report, an interesting sale to Brazil for 27,000 tonnes was recorded. The sale might reflect the tighter than expected Argentinean wheat supply and the fact that the Brazilian Real has lost to the U.S. Dollar recently, further displays the significance of this business due to the lower purchasing power of the Brazilian importer. The trade should take notice of this business and look for more to be done as Argentinean farmers intend to plant less wheat this year. Middle Eastern and North African countries continue to move to the sidelines until prices stabilize which only supports the long term outlook for their demand. Jordan, who made no purchase of wheat on their July 4th tender, postponed their tender for the second time to July 17th. Furthermore, and mentioned Friday, Egypt has been absent from the world trade as of late. The world's largest importer has reportedly secured 3.7 million tonnes of local wheat vs. the 2.6 million tonnes bought last year. While this provides a slightly bearish tilt short-term, it could mean higher prices lie ahead on a long-term basis as domestic supply dwindles and pent up demand builds. In addition, the outlook for Black Sea exports is questionable which could provide the U.S. with a competitive advantage in the second half of the crop year.
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