Rains in the U.S. Plains last week slowed this year's harvest and prompted concerns about the quality and quantity of this year's hard red winter wheat crop. The heavy downpours kept the U.S. winter wheat harvest at 11%, up just 6% from the previous week and 9% behind the past 5-year pace of 20% for this date-limiting selling in this food grain. But disappointed Oklahoma harvest yield reports and quality concerns because of excessive moisture lifted U.S. prices to their highest values in eleven years and their third highest level ever last week. The rains moved into the eastern Midwest this week, however, dousing some the recent fears of a drought cutting U.S. corn and soybean prospects for the coming year.

The U.S. good/excellent ratings slipped 2% to 50% this week with OK (-5%) and NE (-5%) top condition levels being off, but minimal changes in KS, CO, and TX ratings and an open harvest outlook for the coming week limited enthusiasm for this pit. This week's spring wheat's G/E ratings increase by 4% to up 85% because of a jump in MT conditions was a bit of surprise. This year's Northern Plains crop is off to great start, but scab and other diseases could become a problem issue if excessive moisture occurs during heading.

This week's good/excellent corn conditions did drop 7%, to 70%, as dry soil conditions that have been centered in Southeastern U.S. this year expanded into the Eastern Corn Belt with IL (-21%), IN (-13%), and OH (-13%) top categories being off. However, rains moving into the ECB and the forecast of a secondary front with better moisture later this week retreated values from this year's highs. Soybeans' top two categories also slipped 5% to 65%, because of eastern and southern area dryness this week. 2007's seedings are winding down with this week's 96% pace, 2% above the past 5 year average of 94%.

Tight world supplies and a smaller U.S. winter crop next month are positives for wheat. However, a larger U.S. spring wheat crop (higher seeding on June 29 acreage report and excellent ratings equaling higher yields) is compensating for this year's S. Plains losses and the expansion of U.S. harvest over the next 3-4 weeks-prompting us to up 07/08's wheat sales to 65% on current values and begin 2008/09 sales with a 10%-15% hedge at $5.60 or higher  for July Chicago or KC wheat. With this week's ECB moisture forecast improving dramatically in many areas, 07/08 corn sales should also upped to 40-45% on December values above $3.95. Because August pod filling in beans and U.S. and world supplies is tightening in the next year, producers should hold new crop sales at 30% for now.