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Wheat market feeling pressure from all sides, analyst says

After making a good run up, the wheat market is feeling pressure from harvest activity, low exports, speculative selling, and higher acre estimates, one analyst said on Thursday.

Sid Love, Kropf & Love Consulting Services LLC., said lower
cash prices for soft red wheat between $0.60-$0.70 under, and a drop of $0.45 at the Gulf in two days, is a sign the market was overbought.

"Keep an eye on the corn and soybean basis, they are weak as well. This is a clear case of higher demand for futures than cash and we are being led by speculative interests."

The speculators sold between 10,000-20,000 lots in the past few days, Love said. "They have bailed out of wheat here short run, but it doesn't mean they won't be back."

On Thursday, CBOT July wheat ended down 1 1/2 cents at $3.92 after setting early a 3-week low of $3.89. KCBT July wheat closed down 4 1/4 cents at $4.83 1/2. MGE July settled Thursday down 2 1/2 cents at $4.59 per bushel.

Meanwhile, Informa Economics' recent 1.0 million higher estimate of wheat acres compared to the USDA still weighs on the market.

"The market looked at that and said maybe the amount of wheat we produce won't be as bad," Love said.

Harvest activity is a little ahead of schedule by a few weeks with higher than expected yields being recorded.

In Enid, Oklahoma yields have improved from 10-20 bushels per acre in the early harvest to 30-40 this week, Love said.

"The yields will be better than that in Kansas and the further north you go," Love said. "The yields should be better because the rain patterns were better."

In Kansas, USDA estimated wheat production of 9.4 million acres, compared to 9.5 million a year ago. Wheat yields are estimated at 34 bushels per acre.

"That's a pretty low yield for Kansas, but we shall see. You won't know this crop until we get further into harvest. Some farmers will have yields of 20 to 25 bushels per acre and others between 45-50."

After making a good run up, the wheat market is feeling pressure from harvest activity, low exports, speculative selling, and higher acre estimates, one analyst said on Thursday.

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