Drought Conditions Persist For WheatOptions Xpressupdated Jan 03, 2013TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.Thursday, January 3, 2013 Wheat futures have been in steady decline since November, largely due to soft export demand and lack of outside market support. More recently, the price declines decreased in ferocity due to the "Fiscal Cliff" talks, which took a toll on the risk markets of equities and commodities. Now that this has passed and a deal is in place, the markets should now trade on their own merit. Wheat conditions have deteriorated across much of the growing region. Argentina has had a bad crop year, as the growing region there has either experienced the worst drought conditions in 62 years or excessive rains closer to the coast. Wheat could potentially be the driver of grain prices in 2013.Fundamentals Wheat prices continue to move lower, despite growing conditions in the US being the worst they have been since the Dust Bowl. Currently, only one third of the Wheat crop can be rated as good or excellent, versus 52% at this time last year. Kansas, which accounts for a good portion of the Winter Wheat crop, has only seen 10% of normal precipitation over the past two months. Over 30% of the state's Winter Wheat crop has not emerged, meaning it likely can be written off. Globally, there are concerns that the US, Russia, Argentina and Europe could all see reduced output. Some relief may be in sight for farmers, as snowfall over approximately two-thirds of the state could prevent winter kill. Moisture over the next two to three months could vastly improve conditions, as Wheat is a grain that can handle adverse conditions better than other grains. It is imperative that the Grain Belt see moisture in the coming weeks.Technical Notes Turning to the daily May Wheat chart, we see that prices have collapsed in recent weeks. May Wheat fell a dollar in December alone. Prices are rapidly approaching support at the 700 level, which can be viewed as critical, as this was the support that held the market prior to prices exploding in June. Not surprisingly, the RSI indicator is giving extremely oversold readings. Rob Kurzatkowski, Senior Commodity AnalystEditorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.