September Chicago wheat was trading 2 cents lower near 7 am CST. Outside markets are slightly positive this morning ahead of a key employment report this morning. US Stocks are rebounding after yesterday's sell off. The US dollar is lower offering marginal support to commodities. The wheat market continues to be stuck in the crosshairs of a shrinking US corn crop and its own slightly bearish, short term fundamentals. Export sales for wheat were near market expectations yesterday which were supportive. Bearish and conflicting reports out of the Black Sea have triggered long liquidation this week and that has inspired money to move to the sidelines. After sifting through various reports and balance sheets, it seems the market is trading a grain production number for Russia between 75-80 million tonnes and a wheat crop near 45-47 million tonnes. It is likely the USDA may trim production for Russia next week from its current estimate of 49 million tonnes. Production cuts for Kazakhstan and Ukraine may also be in the cards. The Black Sea continues to sell export business to Middle Eastern countries and July grain exports were seen at 2 million tonnes and August exports are expected to be near 2.5 million tonnes. Next week will be a big week for the wheat market as Russian government officials will meet on August 8th to discuss their domestic supply and export expectations for the coming year. The recent drought in the Volga Valley and Urals has drastically cut production but it is unlikely that any export restrictions will be announced next week. Regardless, comments made by officials should be closely monitored. The Black Sea weather outlook has eased a bit with recent rainfall hitting spring wheat areas. The rain will stop stress on spring wheat, but the damage already done to yield is irreversible at this point. The western US remains a concern for the Hard Red Winter Wheat growing areas. Topsoil moisture levels remain at 96% short to very short for Kansas, Nebraska, and Oklahoma. Rainfall will be needed in the month of August to attain soil moisture profiles that will foster root development for planted wheat. There is still time for this to happen but a general soaking for the region will need to come from a tropical storm through the Gulf of Mexico and Texas or by El Nino. The wheat market may not be a top priority for market analysts at this moment, but a successful harvest will be needed next year due to the increased feed and export demand that will be seen in the coming year.
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