July wheat was trading near 13 1/2 cents higher near 7:30 central time. Outside market forces look somewhat positive today with a weaker US dollar and some strength in the stock market. July wheat traded higher overnight after the USDA revised crop conditions lower for corn and soybeans yesterday afternoon. Furthermore, Russian analyst SovEcon lowered their estimate for 2012 wheat production to 50 million tonnes from 56 in 11/12. Australian wheat stocks fell 16% to 15.93 million tonnes at the end of May, signaling cheap world prices and a strong export pace. Short-covering from fund traders was noted as strength in the other grains and positive outside markets lent strength to the wheat market. Support in wheat could resurface if international production and weather issues do not subside soon. The weekly Spring Wheat Conditions report showed 76% was rated good/excellent compared to 75% last week and 72% last year. North Dakota dropped 1% from last week to 87% while Montana jumped 5% to 70%. Minnesota was unchanged at 71% versus 80% last year. The 6-10 day weather model shows above normal temperatures for much of the Spring Wheat crop areas which could add stress and yield loss to a significant portion of the growing area. Continued deterioration in Spring Wheat conditions is likely if weather patterns remain warm and dry. The weekly Winter Wheat Harvest report showed 48% complete compared to 35% last week and 25% last year. The 10 year average for this time of year is 20%. The previous highest percent complete was 34% in 2006. Oklahoma is 96% complete. Kansas is 80% complete. This time last year, Kansas was 22% harvested. Soft Red Winter Wheat harvest has begun in Ohio with 2% of the harvest complete. Wheat continued its bounce from yesterday and rallied to take out last week's high of 642 1/4 basis July wheat. Funds continue to hold a sizeable net short position which could result in continued short covering as strength spills over from the corn pit. The USDA expects declining ending stocks for the US and the world for the 2012/13 season as major wheat exporting countries shift production to more profitable feed grains and weather curtails yield estimates in Russia and Australia. Strength in corn and beans, along with cooler heads in Europe has provided the wheat market with positive momentum this morning.
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