September Chicago wheat is trading 2 1/2 cents lower near 7:30 am CST. Chicago wheat began the Sunday night session slightly lower but quickly turned positive on higher corn and soybean markets. Follow through support is being seen from the higher trade last week. European markets traded slightly lower overnight following last week's strong performance. The Euro nudged higher against the US Dollar and is trading lower early this morning providing support to the US commodity sector. Chicago wheat struggled to find it's footing Sunday night following last week's impressive gains. Wheat saw support from a sharply higher corn market overnight and from ongoing concern over the supply situation in The Black Sea. The weekly Commitment of Traders reports held no major surprises following the sharp declines in price over the reported week. Non-Commercial and Non-Reportable combined traders held a net long of 44,292 contracts, down 6,444 contracts for the week. Non-Commercial traders were net long 60,197 contracts, a decrease of 4,595 contracts. Trend-Following Funds (Non-Commercial Net of Index Funds) now hold a net long position of 16,540 contracts, down 4,787 from the week prior. The largest long position held by these traders is 30,146 contracts and the current position is at a 5 year high. Two closely followed Russian grain analysts added some bullish momentum to the market overnight after each cut their 2012 grain and wheat production forecasts. SovEcon cut their grain forecast to 71-72.5 million tonnes from previous estimate of 70-74. The analyst also cut their wheat production forecast for Russia to 39-41 million tonnes vs. 40.5-42.5. The wheat production forecast is near the low end of market expectations. The Institute for Agricultural Market Studies also cut their grain harvest forecast to 73 million tonnes from 75.4. The agency provided no wheat harvest projection but didn't rule out the possibility of further declines in grain production. Wheat harvest remains underway in the Urals and Siberian regions of Russia and early yield reports continue to disappoint and in some cases are being reported at nearly half the size of year ago levels. A drier than normal forecast in Australia needs to be monitored going forward. Areas of southwestern Australia have seen 30-40% of their normal moisture needs. There is still time to "make" the wheat crop but an El Nino forecast for September and October may continue to stress these areas. Current estimates peg Australian wheat production at 26 million tonnes. Continued dry weather could move this production forecast closer to 22-24 million tonnes. Kansas, Nebraska, Colorado, and Oklahoma are trending drier and limited relief is expected through this week. Rainfall this week is mostly restricted to the eastern US and Delta. Any rainfall in the central or western Midwest will be light. The Hard Red Winter Wheat crop will be planted soon and a steady dose of precipitation will be needed to get the crop off on the right foot.
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