Wheat continues short covering correction

In the overnight session the grains traded higher with wheat leading the way up 4 3/4 cents, corn traded up 1 3/4 cents and soybeans up 1/4 cent. The U.S. dollar index is trading about a 1/4 percent higher this morning and crude oil is down 58 cents.

Yesterday, Agroconsult raised its forecast for Brazil’s 2014/15 corn and soybean crop higher. The consultancy raised its forecast for soybean production from 95.8 million metric tons to 96.1 million metric tons, and raised their first corn crop forecast from 29 million metric tons to 30.7 million metric tons. The consultancy also raised their second crop production expectations to 51.4 million metric tons up from 50.4 in March.

Argentina exports have slowed recently as buyers hold back from purchasing grain hoping the government will turn up pressure to resolve a three week long strike by the Industrial Oilseed Complex Workers Federation.

The drought monitor has shown improvement over last week with the last of the severe and extreme drought in the southern Plains disappearing after four weeks of substantial rains. The rains have acted as a double edged sword providing moisture relief to parched soil, but causing quality concerns to a wheat crop late in its growing season. As a result of the heavy rains the western half of Kansas and Oklahoma and parts of Texas have been reduced to mostly moderate drought to abnormally dry from ratings like severe and extreme drought just weeks ago.

—Cody Bills