CROPS

Corn supply: highest expected global ending stocks in the last eight years - negative. Soybean supply: largest global ending stocks of last seven years - negative.

Wheat production: below-trend production in the US, but expanding production outside of the US leading to global ending stocks possibly the largest of the last four years. - negative.

US dollar Index: weakening but still in two-year up-trend channel. - negative.

Long-term interest rates trending higher with a growing sense that the Fed is about to tap the brakes on monetary eas- ing policy. The Bank of Japan did not continue the previous week's easing stance this week, another slight whisper of general global interest rate increases. - Indirect impact on grain prices - negative.

In the big picture background, the influences on wheat prices in general are not supportive, but the short-term will be dominated by Wednesday morning's USDA Supply and De- mand Reports and are set up for a little bounce. Most observers are expecting US production expectations to shrink (as they often do at this time of year as the wheat crop matures, ending ideas of expansion).

Global wheat production potential usually has less impact on short-term price movements, but the markets will be most sensitive US export figures in the months ahead. The wheat sales competition will be aggressive from many northern hemispheric sources this fall and likely from southern ones next winter.

Overall trendline for wheat (notwithstanding the chill on Pacific Northwest white wheat prices due to the recent GMO controversy): sideways - still within a nickel or so of the pre- cise center-line of the now nearly 4-month old trading range.

Nominal white wheat prices in Portland have declined about 40-50 cents in the days since the announcement that a single field in Oregon was found to contain some wheat linked to Monsanto's proposed strain of "Roundup Ready"wheat, although movement of wheat from most country origins has been limited. There are still active buyers in Portland. The test program for the genetically engineered variety of wheat was terminated nearly a decade ago in Oregon and all supplies of the strain were supposed to be accounted for and destroyed.

The overall influence on the wheat markets in general, while potentially extremely negative, has been very muted, as most observers expect that the phenomenon to be isolated and limited. Meanwhile, the Portland market usually softens heading into harvest anyway, so the price pressure is not unexpected and is relatively light compared to what it could have been.

So the trend for wheat prices is sideways with the cau- tion flag out. Only a move below $6.81 Chicago September futures (about 25 cents below Tuesday's markets) will attract serious selling attention from wheat traders, while Kansas City's July hard red winter futures contract has actually crossed below a similar boundary selling flag around $7.30, making it a leader in the negative price direction, as harvest expands rapidly in the KC tributary states.

Information and opinions contained herein come from sources believed to be reli- able, but are not guaranteed as to accuracy or complete- ness. The risk of loss in trad- ing futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or op- tions, it is possible to lose more than the full value of your account. All funds com- mitted should be risk capital.