July wheat was 1/2 cent higher overnight. The dollar index moved to another new 12-month high overnight.

The July wheat contract posted a hard slide last week after briefly testing the 100-day moving average the week before. The lows were extended to start the current week on a new high by the dollar. However, a lack of sell orders in wheat erased the losses into this morning. This comes at a time of mixed to negative activity on the export front.

On the negative side, US export sales fell below the average needed each week to reach the USDA’s export projection for 2009/10 again last week, and recent sales to the Middle East and North Africa have also again shut out the US. In addition, the recent slide in the Euro has simply added to the price advantage of France and other European suppliers over the US in these critical markets. On the plus side, traders in Russia report that last week’s price rise there was due to the fact that some exporters are not fully covered for current export sales and they have needed to scramble to attract supplies for the most near term export contracts.

The Commitments of Traders report for the week ending May 11th showed small net buying by funds. Trend-following funds were net buyers of 2,028 contracts to decrease their net short position to 48,278 contracts. While the trend-followers’ net short position is down substantially from its recent record level of near 75,000 contracts, it is still the largest net short position held by trend-followers in any agricultural commodity market. Index funds were net buyers of 1,055 contracts.

Very wet weather last week in the northern Delta, Missouri parts of Iowa and Illinois has given way to a very welcome warmer and drier forecast for this week. The winter wheat crop remains in generally good shape, but excessive moisture in some areas has raised concern over the potential for increased levels of some plant diseases. One analyst said that a week or two of dry weather would help allay those concerns and that the warmer outlook is also generally considered a plus. Dry weather in Australia’s western wheat belt continues to cause concern over the production outlook there. The planting season lasts from May through July.
Bron:CME