September Chicago wheat traded mixed overnight but was 3 cents higher at 6:30 am CST. Kansas City and Minneapolis wheat followed the Chicago wheat market higher. Chicago wheat lost to corn as traders primary concern is the tightening domestic supply outlook for the US corn market. Outside markets are mixed this morning with the US Dollar trading slightly lower and stocks set to open marginally higher. Markets await Thursday's comments from the European Central Bank in hopes a new plan to stem the debt crisis will calm market fears and force more stimulus into European economies. The Federal Reserve will also meet today, but no action is expected to be taken by Fed officials. The corn market continues to drag wheat higher in the short term but the long term outlook for the wheat market remains positive. The short term trend for wheat is completely dependent on where corn yields end up, but all of this could change next week as Russian officials meet to discuss their grain outlook for the coming year. Most of the market is now in agreement that the current USDA production estimate for Russia at 49 million tonnes is overstated by nearly 4-5 million tonnes. Some traders suggest that if weather patterns remain warm and dry in spring wheat growing regions, production could fall to 41-43 million tonnes. This is adding risk premium to global wheat prices and to speculation that Russia will issue export restrictions this crop year to stem domestic inflation. Important precipitation will fall in Kazakhstan in the next week, but the Southern Volga and Ural areas are expected to remain dry. Their spring wheat is currently in the grain filling stage of growth, and the window for a reversal in yield prospects due to favorable weather is quickly closing. US exports remain slow as Middle Eastern and North African buyers have seen lower prices out of Europe and the Black Sea. This trend is likely to continue until US corn prices top out and wheat has to follow corn lower to price itself back into the global market. Wheat harvests in Germany, France, and the United Kingdom have been delayed due to recent rainfall, and there continue to be reports of high vomotoxin levels in certain growing areas. While this wheat may not be suitable for human consumption, it will work into feed wheat channels. It is also being reported that South Africa purchased 35,000 tonnes of Russian wheat overnight. The weekly Spring Wheat Harvest report showed 28% of harvest was complete compared to 12% last week and 1% last year. The 10 year average for this time of year is 8%. Quality reports remain favorable so far, and yields have been average to above average. The weekly Spring Wheat Conditions report showed 63% of the crop was rated good/excellent compared to 60% last week and 70% last year. The weekly Winter Wheat Harvest report showed 85% complete compared to 82% last week and 77% last year.
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