Wheat prices hit fresh contract highs this week after several analysts lowered their estimates for overseas wheat production.

While both Australia and the Ukraine have been suffering through droughts for weeks, major European wheat growers were hit with a deluge of wet weather this week. Heavy rains and localized flooding in Germany, France and Britain have damaged wheat fields and made harvesting the remaining crop very difficult in the near-term.

With wheat inventories already predicted at record lows around the world, this further hit to production pushed wheat dramatically higher on Tuesday with the September contract rallying 21.75 cents, or more than 3 percent on the day.

On Thursday, USDA announced that the U.S. exported more than 2 million tons of wheat for the week ended July 19. This was a record for the current year and was double what analysts had expected. Analysts took this strong demand for wheat, even amid record-high prices, as a bullish indication for wheat prices. Through midday Thursday, the September wheat contract was up an additional 23 cents per bushel, more than 3 percent.

Only time will tell how much damage was done to the European wheat crop, but any significant losses could push wheat prices still higher. If strong export demand continues in coming weeks, it could push prices higher. Counterbalancing all of this is the U.S. wheat crop, which, as of Monday's crop condition report from USDA, was in better-than-average condition for this time of year. If the U.S. sees good weather and better-than-average wheat yields, prices could be pressured lower.

Crude oil suddenly reversed a three-day losing streak on Wednesday after the Department of Energy reported crude oil inventories unexpectedly dropped in the most recent week. The bullishness of the unexpected drop initially was tempered by the bearishness of builds in gasoline inventories. However, traders apparently took the inventory fall as an opportunity to take profits from previously sold positions, as well as to put on additional long positions.

The September crude oil contract rallied by more than $2 on Wednesday, with follow-through buying extending into Thursday. In just two days, crude rallied from its Tuesday low by more than $4 per barrel, a more than 5 percent increase. If crude inventories continue to fall, traders could push prices higher. However, if inventory builds are seen in coming weeks, it could undermine the recent strength and cause prices to fall.

Copper prices saw declines every day this week after several weeks of increases when traders learned that several labor disputes seemed to be subsiding. Copper prices had been in rally mode since late May, as labor disputes and outright stoppages in Peru, Chile and Canada threatened to disrupt copper supplies in coming months.

With copper demand steadily increasing due to strong global economic growth and a building boom in China, traders used the potential supply disruptions as a reason to buy. Since the end of May, the September copper contract had risen by 48 cents a pound, or 15.1 percent.

This week, traders learned that several companies were close to resolving their labor issues. This turn of events caused traders to take profits by selling their previously purchased positions and pressured prices lower throughout the week. By midday Thursday, copper prices had fallen by almost 13 cents per pound on the week, or about 4 percent.

If these labor disputes are resolved in the near future, it could further depress copper prices.

Walt Breitinger is vice president of commodities at A.G. Edwards and Sons. He can be reached at (219) 738-6460.