July Chicago wheat is trading 17 cents higher, or up 2.6%, as of 7:30 CDT. Wheat futures jumped on warm and dry weather over the weekend and much of the same is expected in the 6 to 10 day forecast. The November Matif Milling Wheat contract joined U.S. wheat markets and gapped higher on the open, trading 5.00 Euros higher, or 2.5%. For outside market forces, energies and U.S. stocks are offering resistance following risk off, macro sentiment overnight. Overnight, the wheat complex continued its rally by posting its 6th consecutive new high for the move. Grain markets opened sharply higher on weekend weather deemed destructive to the new crop corn potential. Weekend weather map updates, from the National Weather Service, show above average temperature and below normal precipitation for nearly all of the Midwest in the 6 to 10 and 8 to 14 day forecasts. Tropical Storm Debbie reached land over the weekend but rainfall was limited to the Gulf Coast and South Delta regions. Rainfall continues to be confined to the Gulf Coast region this morning with no signs of rain in the entire Corn Belt. Overnight weakness in the outside markets is helping wheat this morning as managed money liquidates short positions and head to the sidelines. The Commitments of Traders reports as of June 19th showed Non-Commercial traders were net short 10,112 contracts, a decrease of 1,019 contracts for the week. Trend following funds covered 1,389 contracts for the week leaving their net short position at a hefty 55,713 contracts. Non-Commercial and Nonreportable combined traders held a net short of 34,250 contracts, down 2,746 for the week. The market still looks vulnerable to short-covering from funds. Despite the obvious concern towards the U.S. corn crop, wheat continues to have its own problems on a global level. The Volga Valley, one of the most important wheat growing areas in the FSU, will see showers to the north early this week. Unfortunately, the concern for much of this summer has been restricted to the south. The recent rainfall has provided minimal relief to winter grains but early yield estimates for winter wheat, in major growing regions, are coming in at 5 tonnes per hectare, 2 tonnes per hectare lower than last year. Furthermore, the head of the agriculture department for Ukraine's state weather centre was quoted as saying, "This year, our wheat harvest will be 10 million tonnes lower than in 2011". The 2011 production estimate for Ukraine, according to the June USDA report, was at 22.12 million tonnes. The USDA also estimates 2012/13 production at 13 million tonnes. This would imply that the USDA may be overstating not only the Russian production by 1 to 2 million tonnes, but also the Ukrainian.
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