CROPS

At the end of May, 84 percent of Washington winter wheat was reported by USDA in good-to-excellent condition. Oregon was listed at 76 percent and Idaho at 91 percent. Spring-planted wheat in the Pacific Northwest is looking great, even though it was late getting into the ground due to excessive moisture. Canadian spring wheat planting has been delayed because of that moisture, so intended planting totals given a few weeks ago will likely show to have been a bit optimistic.

As of Monday, June 11, the entire U.S. winter wheat crop is reported at 53 percent good-to-excellent versus a 10-year average of 45 percent for this date and harvest is 35 percent completed already. If you were a wheat buyer or exporter, would you be worried? There are no big problems in the northern hemisphere at this point. Even Russia and the Former Soviet Union has had some moisture relief in the last week or two. Chicago wheat prices have erased the 1$ per bushel upward spike from May 15-21, and are now once again testing the low end of the 8-month-old range. The trend? Still flat in spite of the wide swings, with the obvious short-term negative momentum, but it is safer to own Chicago wheat at $6 per bushel than it was at $7. White wheat prices at Portland peeked over the $7 per bushel level on May 21 and 22, but today they have returned to around $6.67. There are few non- speculative arguments to buy or hold much wheat at present, but the "gut feel" says it's OK to think about it, like there is some kind of identifiable low coming soon. It remains clear that European economic news has the potential to completely overwhelm any wheat market fundamental or technical reasoning in the short run.

Crude oil is at its lowest since last October, around $83.50 per barrel. That is $27 per barrel lower than the first week of March, about 16 weeks ago. The short-term technical aspects of this market suggest that is about all for the downside at the moment, so a return to the $100 per barrel "tolerance level" that has evolved and is approved by the Saudis seems likely this summer. Retail gasoline prices in the PNW have not followed the crude slump down, but a renewed upward tendency for crude will probably push gas prices steady to higher.

The pressure toward "flightto safety" for capital out of Europe has eased in the last week, as US long-term interest rates hit their lowest ever on June 1st, then began to bounce. The U.S. dollar has been trending stronger since the first week in May. If the Europeans can pull a rabbit out of the hat and show a real solution to the banking crisis, the bond market will come back down (rates up) and the dollar will ease, but that seems remote for now. Long-term borrowers in the U.S. are seeing lifetime lows for money costs right now - if they can qualify.

Information and opinions contained herein come from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital.