July wheat was 2 cents lower overnight. The dollar index was substantially higher.

Favorable crop weather and a good pace of export sales have kept the wheat market in a sideways pattern so far this week. Traders indicate that sideways price action in the dollar this week has added to the lack of direction. Weather continues to be mostly favorable for the US winter wheat crop, especially soft red. This is due to the mostly dry and warmer conditions of recent weeks along with forecasts of scattered light to moderate showers in the Midwest today and into the end of the week followed by more dry weather starting this weekend and extending into the start of next week.

The hard red winter wheat belt is a somewhat different story. Rains are also expected to push into the southern Plains today and tomorrow. However, a cell of heavier rains is expected to travel from central Texas up through Oklahoma and into Kansas during this period, bringing unwelcome larger totals in a few areas. Analysts indicate that this is not expected to be a significant problem yet but that further rains would be a cause of some concern due to the increased possibility of moisture-related plant diseases.

Government officials in Australia said yesterday that locusts could damage Australia’s wheat crop this fall (spring in Australia). This is ahead of the 2010/11 wheat harvest. Large-scale locust infestations are relatively common in Australia with the last such event occurring in 2004. If officials are correct about the infestation, it would affect the country’s eastern agricultural areas. July wheat rallied to its highest level in a week yesterday before settling back to marginally lower on the day into the close. Wheat lost substantial ground to corn in moderate to occasionally active trade by spreaders between those markets. The day’s weakness came despite a lower dollar throughout the session.

The USDA will release its latest export sales numbers this morning. Sales need to average 116,800 tonnes each week to reach the USDA’s current export projection. Japan bought 157,000 tonnes of wheat on its weekly tender. A private Israeli firm bought 35,000 tonnes of feed wheat according to traders.
Bon:CME