Serving Waitsburg, Dayton and the Touchet Valley
Serving Waitsburg, Dayton and the Touchet Valley
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The song of harvest has begun. The base rhythm of big diesel engines, the occasional shrill warble of fire trucks and the soothing rush of cab air conditioners, all blending into a roar of wheat, peas, lentils, garbanzos and more flowing over the top into bins, barges and vessels. The song is always new, but ancient, hot, dusty. It is anxious, hopeful and sometimes joyful in the periods between frustration with broken machinery and the occasional confused harvest crew member. The satisfaction of completion of a yearlong cycle of hard work...
Chicago wheat just put in a positive price week, the first since August 5-6-7-8. December futures jumped from $4.65 to $5.01, 36 cents in six trading sessions. A two month old trend-line was broken last Friday when the “Dec” closed decisively over $4.85. So now what? In order to confirm a new upward price bias, we have to build a case for higher prices based on more than just a pattern on the chart. And that, oh best beloved, is a tale yet to be told. Some of the enthusiasm for wheat came in sympathy with corn, which received a boost from las...
Commodities prices as a class have been declining since 2011, according to the CRB Commodities Index. Created by The Commodities Research Bureau, it is an indicator based on a wide selection of commodity prices; that is, prices for real-world “stuff” from burlap and copper to crude oil, wheat and zinc. There are 23 different items whose prices go into making the numerical index for the CRB. Watching the chart for this index is to observe what is happening in the real world. We all know that crude oil has dropped from $107 per barrel 14 mon...
Wheat is an actively traded market, with participants ranging from individual small speculative traders, farmers and local cooperative elevators to billion dollar trading funds and multi-national grain handling firms. There are futures contracts trading all over the world, but soft red wheat futures at the Chicago Board of Trade are the best known and most widely followed. This is partly because of its reputation as a reliable indicator of global wheat prices, and partly due to its great liquidity or ease of trading, from “one-lots” of 5,0...
The wheat market as revealed by Chicago soft red winter futures is a one-day wonder. Since mid-May, all of the significant price changes have come in single sessions. On May 14, July contracts opened at $4.81½ and closed 33 cents higher at $5.14½. This week, following the three-day weekend, wheat opened at $5.15¼ and closed 22 cents lower at $4.92¾. Every other session for the month has been quiet and small. This is sufficient to exasperate short-term traders, although the profession of trading wheat is a study in exasperation anyway. The tre...
U.S. grain markets, including wheat, corn and soybeans are reflecting some volatility, as they bounce in a 30-40 cent range, but essentially they have no direction. Wheat in Chicago has accomplished nothing since late January this year. Tuesday’s closing price was within two cents of the same level as the first day of February, nearly 3 months back. The world always waits to see if spring weather in the northern hemisphere will create a crop-scare. So far the prime ingredient, moisture, has shown up enough to at least prevent a disaster in m...
In the 23 trading sessions following Dec. 18, 2014, the Chicago March wheat futures contract dropped $1.22 per bushel. The average bid for Pacific Northwest white wheat in Portland also declined by about 90 cents (approximately 73% of the Chicago move). The primary drivers for this move down were simple; a large crop of wheat in the northern hemisphere last fall, and a very powerful upward move in the cost of U.S. Dollars to foreign buyers. A jump from near 89 to more than 95 in the Dollar Index represents as much as a 6.7% increase in the...
The futures markets are always keen to respond to dramatic events and ideas, usually exaggerating the effects, occasionally well beyond any conceivable reality. Still, at this point the markets have so far reacted to the drama in the Ukraine's Crimean Peninsula in a relatively orderly fashion, although the discussion about the actions of Russian President Vladimir Putin is dominant at the coffee shop. It is quite clear that President Putin desires to control the seaport at Sebastopol, which is a big deal for the short-run with regard to exports...
For the 11 trading sessions ending Tuesday, Chicago wheat prices have traded within 20 cents per bushel of the lowest price since July 2010. There is doubt in the minds of would-be buyers; those that normally like to try to buy bottoming patterns, those that think seasonal patterns are likely to be completed now and those that are holding very profitable short-sold trades established at much higher prices over the last couple of months. There are signs that US wheat is working its way into competitive global wheat marketing channels. Egypt pu...
One of the occupational hazards of being a wheat producer or landlord is that most of the time spent on analyzing wheat prices is focused on determination of "why the price should go UP." The problem is a kind of blindness to reasons why the price should go DOWN. The psychological basis for ignoring negatives is obvious, but it can cause a wheat marketer or trader to wait too long to sell. Then, often near the lows for the year, emphasis shifts to "damage control" instead of optimization. That period is at hand. Wheat prices are suffer- ing...
End-of-year position adjustments coming up? Most very large futures traders are holding onto extremely heavy net short-sold positions in Chicago wheat. The other major wheat contracts in Kansas City hard red winter and Minneapolis spring also reflect net short speculative po- sitions, although less ponderous than Chicago. Since this category of traders is known for rapidly shifting from one side of the ledger to the other periodically, this big bulge in net-sold positions will ultimately lead to a run to the upside for wheat prices, probably...
I f you find yourself waking down the centerline of a busy street, it is very useful to be aware of where the cars and trucks are (in both directions). And every once in a while it is good to look a couple of blocks ahead to be prepared for that big semi. For wheat owners and traders, it is an occupational haz- ard to lose perspective; to become caught up in the smaller, day-to-day information and action flow and to forget that the price range of the last several months is only a very small part of the whole picture. The market always tells us...
The price of wheat revealed by the Chicago markets since August/September of 2013 has been through quite a swing, starting from around $6.35 at harvest lows, moving up to $7.10 or so in October, then returning to the lows again in November. That is up and down 75 cents per bushel each way in about 2 months. The Chicago contract is a globally watched price and a good wheat price bellwether, although in this case, Pacific Northwest white wheat traded all the way through the period without a twitch or bobble. The price in September 5th was about...
Wheat markets have a language. For the wheat owner right now, the decision to hold wheat in storage or sell it before year-end has many facets, like taxes, interest costs, bills due and so on, but sometimes the market's voice tells us that selling and then paying to hold wheat in storage may make sense. It might even pay a little interest, if the market price structure includes a "carry", that is when prices for contacted delivery in later months are higher than prices for nearby dates. This week, Portland white wheat bids are higher for...
A fter a very smooth and orderly decline that has last- ed three weeks, the wheat price has paused. There is always a kind of nervous twitch exhibited when the market reaches the end or beginning of a significant move. Some would call this "indecision," but a week-long sideways pattern with quick jumps back and forth that last only hours at most is the mark of a market in "read" mode.'' The last week saw us through a key USDA monthly report, all the more intensely observed as we missed the monthly report for October during The Shutdown. The...
A fter a very smooth and orderly decline that has lasted three weeks, the wheat price has paused. There is always a kind of nervous twitch exhibited when the market reaches the end or beginning of a significant move. Some would call this "indecision," but a week-long sideways pattern with quick jumps back and forth that last only hours at most is the mark of a market in "read" mode.'' The last week saw us through a key USDA monthly report, all the more intensely observed as we missed the monthly report for October during The Shutdown. The ef-...
Tuesday marked the 12th trading day during which the December wheat price in Chicago worked to lower levels: a 50-cent decline, which surrendered pretty much all of the upward gains from the mid-September/mid- October rally. Even in its weakness, the pattern still allows the concept of a larger up-trend line, as the price would have to reach and confirm below $6.35 (21 cents below Tuesday's close) per bushel to negate the new positive slope created when the price poked above seven dollars in October. Current wheat owners that have sweated out...
On September 16, the Chicago December wheat contract price began a move up from seasonally expected lows. Over the next 26 sessions, 70 cents were added to the price of soft red winter wheat to be delivered in De- cember to Chicago/Toledo locations. Global wheat traders took note of the change in direction for this "most-watched" market, the first significantly measureable upward move since July 2012. The change in behavior awakened hopes for a new major price trip upward, but the road has been muddy and slow for the last week or so. We are...
One really nice thing about trying to understand the wheat market compared to bonds, stocks or other financial markets is the reality factor. Wheat is real stuff, made from sunshine, water, dirt and a lot of hard work. There is only a given amount of wheat produced and consumed in a year, with the same ancient variables at work; mostly weather, with a little influence from other markets thrown in, but the biggest variable, often even larger than weather, is government. In the last few weeks, we have had quite a show to watch in Washington,...
There is no market of any stripe that is not watching events in Washington, D.C. with a kind of horrible fascination. It is like watching a horror film, knowing that the chainsaw killer is in the next room, and bad things are going to happen, while secretly relying on the author to rescue the heroine just in time. The problem is that there is no way to know if the script will kill her off and leave her boyfriend sobbing and alone at the end, or if both will prevail and ride off into the sunrise to- gether as the monster (apparently) dies in...
The existence and validity of any actively traded market depends on the flow of decisions and actions of a very large number of people. Without this minute-by-minute flow of activity from thousands of speculators, hedgers, end- users, governments and investors each trading day, the market becomes weak, fragmented and much more easily dominated by a few large entities, especially when those entities enjoy their own very wide inside network of "real-world" informa- tion sources. An entity like, say, a multinational grain mer- chandiser, or maybe...
Last week was a great week for wheat prices, even though no news had been the rule for most of the time since the first week of August. On Monday, the last trading day of September, USDA finally gave us something to look at. There's more old-crop corn on hand on farms and in grain elevators than traders expected, according to observers of the USDA-NASS Quarterly Grain Stocks report. In published pre-report surveys, the average analyst guess for on-hand inventories of corn in the US was 688 million bushels. USDA came out with 824 million....
Just like trying to put a vehicle in gear and drive with the parking brake on, the wheat market is laboring way too hard in its attempt to clear a near-term objective to the upside. It is clear that the supply/demand for US wheat shows the tightest balance in the last five years, but that is not the factor it once was. Production of wheat outside of the US has increased steadily over the last decade, reducing the price impact of our "local" all-wheat production on global markets. That fact, along with a better-than-expected corn production...
Chicago December wheat contracts continue to pound away at their life-of-contract lows. Over the entire his- tory of active trading from mid-September 2011, the December contract price reached highs of $9.13 per bushel in November 2012. Since that time 10 months ago, the trend has been lower, with the lowest point a couple of weeks ago at $6.35½. On Tuesday, the Chicago December finished the day session at $6.42, $2.71 below last fall's high. For most producers, that is a major shift in income po- tential. Even for a "small" farmer, that...
The mind of the wheat market is pondering a seasonal low. $6.35 - $6.38 - $6.36hellip;The last three lows printed by the Chicago December futures contract, all within the last three weeks and all within three cents of the lowest the contract has traded in its existence. Following each low, the price has rebounded at least 15 cents within a few days. The pattern suggests that each time wheat gets down to the mid-$6.30's there is some buying support discovered and/or the selling pressure weakens, but there is not enough upward demand to carry...
