December Chicago wheat is trading 7 cents higher near 7:30 am CST. Kansas City and Minneapolis wheat are slightly higher as well. The wheat market recovered from yesterday's sharp loses overnight after corn and soybeans bounced. European stocks edged lower as a working group led by Germany's deputy finance minister discusses the economic impact if Greece were to leave the Euro zone. Asian shares fell overnight and Dalian corn rose. US treasuries saw marginal gains against a slightly higher US Dollar. The wheat market tried to shake off the sharply lower corn trade yesterday but ultimately fell victim to profit taking and technical sell pressure. Bull calendar spread unwinding was noted by traders. Wheat has since bounced higher but additional profit tacking in the corn market could limit gains. The US remains uncompetitive in the world market with Black Sea wheat trading nearly $30 per tonnes more than European or US. Losses yesterday narrowed the price spread as the Gulf of Mexico basis for wheat was steady. The global wheat balance sheet continues to contract and the International Grains Council cut their world wheat production 3 million tonnes to 662 vs. the current USDA estimate of 662.83. Further cuts to the global balance sheet are possible for Russia, Ukraine, Kazakhstan, and Australia in the month of September.

Australia remains in a make or break situation heading into September after August weather has been drier than normal for many wheat growing areas. A majority of the growing areas in Eastern third of Australia saw temperatures near 90 degrees yesterday which is negative factor to the already lower than normal soil moisture conditions. The high heat is expected to extend into next week with only scattered showers. Western Australia also remains a concern, however temperatures are expected to be less of a factor in the short term but rainfall is needed greatly. Reduced heat and steady rainfall in September will be needed to prevent wheat losses.

US wheat areas are expected to see good rainfall in the next week. Key wheat growing areas in Texas, Oklahoma, and Kansas could see over 2 inches but areas of western Kansas may see light accumulation. This rainfall should benefit topsoil moisture conditions greatly as producers begin to plant winter wheat. Tropical Storm Isaac has a chance to replenish top soil moisture conditions in the southeast and Delta for Soft Wheat as well. Soft Wheat growing areas in the central Midwest remain extremely dry. Chicago wheat volume was reported at a paltry 85,224 contracts after yesterday's loses. Open interest increased by 1,012 contracts. The light volume and increase in open interest offers a mixed opinion of the market.