There are a couple of noticeable influences in the wheat and other market atmo- spheres this week. Grain prices are being driven upward by - surprise! - hot and dry summer weather. Crop size forecasts that had been consistently ratcheting higher week-to-week through May are now giv- ing back. The swift plant- ing progress for corn and soybeans in the Midwest earlier this year set up high expectations, but now the plants are in a relatively advanced stage of develop- ment that calls for more moisture even as the sum- mer furnace goes throttleup. U.S. wheat harvest has advanced quickly, reported at 48 percent on Monday. The Russian wheat crop estimate coming from the Moscow-based research firm SOVECON was cut this week to 50 million metric tonnes from 53 mil- lion previously.

All of the grains watch each other closely, and it is rare to see one of the major grain prices move very far without the others at least acknowledging the move. Corn is the market leader at present, with wheat becoming less and less vulner- able to weather in the last half of harvest. Corn crop condition dropped from 66 percent good-to-excellent down to a still strong 63 percent in the last week and there is expectation for more declines ahead. The trend is positive.

The second big influence on prices is a sense of relief emanating from what appears to be some resolution occurring in Europe. The Greeks were able to elect a government that is not hell-bent on withdrawal from the European Union and repudiation of debts. The thin line has held for another week. The Greek situation is not the largest among the string of Nations in the EU struggling with banking/debt problems, but it is the first in line, and a break from the ranks would be seen globally as a crack in the dam. Spanish bond auctions were accomplished this week with a lower interest rate than had been expected, a successful sale and the wolf is backed off for another week or two. The EU component of the world economic system totters on, allowing wheat traders to focus more clear- ly on crop fundamentals and trade.

The U.S. bond market can be used as a real-time indicator of long-term interest rates that affect us all, as well as a feeler-gauge for a general market perception of fiscal risk. The flight- to-safety from Europe has driven the "safer" U.S. government bond upward. In the U.S. since June 4, the price of 30-year govern- ment paper as reflected by the September bond futures contract has fallen from an all-time high of 152 percent of face value in June 4 to around 148 percent on June 19. The easing back from the astonishing highs of the first week of June has been a direct reflection of better conditions in Europe. (The higher the bond price sold, the lower the interest rate paid by the government to borrow the money, and lower bond price trends equal higher interest rates to borrow)

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