Serving Waitsburg, Dayton and the Touchet Valley
Serving Waitsburg, Dayton and the Touchet Valley
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A cross the US and now into Canada, combines are be- ing air-blown off and carefully parked, to await win- ter overhaul and prep for yet another harvest season. Wheat producers have their calculators warmed up and have begun to sell off or ship previously sold grain to pay the sum- mer bills. The buyers of wheat are also watching the markets a bit more closely now. On Tuesday, Chicago wheat prices opened almost a dime higher following the three-day Labor Day weekend, but there was not enough power for warp-drive, so we fell back onto impulse...
Judging the wheat market, or any active market, is a continuous process. Those engaged in such a risky busi- ness know that guessing right about the future price is the Holy Grail of research. Of course there is a multi-billion dollar industry built around providing the "secret" of where prices will be in the future, but there is a common miscon- ception. Many observers make the mistake of focusing on fore- casts or predictions of the future course of prices, when they would be much better served to concentrate on the underly- ing causes of...
I f we could first know where we are, and whither we are tending, we could then better judge what to do, and how to do it. - Abraham Lincoln, June 16, 1858 To ignore a trend is to step into the path of a stampeding herd of steamrollers. The only practical tasks for anyone who wishes not to be rolled out like a piece of dough are to study the environment to be aware of trends, then to make duly educated judgments and thoughtful actions followed by ad- justments and alternates. Every trend has its end. It remains for us to manage when. As of the...
The term "symmetry" suggests balanced proportions, or the beauty of form arising from balanced proportions, according to Merriam-Webster. There are other, more strict interpretations, but this idea fits what is happening in the wheat market right now. Since May 1, there have been five downward and four cor- responding upward movements in the Chicago wheat price futures contracts. Each downward move has been between 10 and 15 trading sessions in duration, and declined an average of about 50 cents. Each has produced a new lower low than the...
When seasonal lows are expected, when the trend has been flat-to-downward for a year and winter wheat harvest in the US is effectively complete, these are the times that try men's patience (with apologies to both Thomas Paine and the women whose pa- tience is also tried). The wheat market has been unable to identify a low point. Each new attempt to rally wheat futures in Chicago since the lows of mid-June has produced only a lower high than the previous attempt, along with a lower low following, the classic definition of a negative trend. On...
There are no looming shadows in the northern hemisphere corn and soybean production areas. Plenty of worries, with some small zones seeing drought, but nothing strong enough to move the markets. Crop condition reports from the largest 18 producing states reflect continued steady development of both corn and soybeans in the US, with corn at 63% good-to-excellent (GTE), unchanged from last week, and soybeans also at 63%, 1% lower. The crop is late, but the subsoil moisture is there, and there is no extreme heat showing on the map. For wheat...
There is a certain sweetness to the memories of harvest, especially if you fade out the heat-shortened tempers, or the seriously itchy spots on the inside elbows and the back of the neck. It is the only season when there is a team in the field working together. The rest of the year, farming is pretty much a solitary event. For me, harvest was more like a game and less like work (of course I did not have much responsibility in the early years ex- cept to be in the right place and ready when...
I n the eight to nine trading sessions since July 11, Chicago wheat futures have declined about 40 cents per bushel, pushing down to new lows last seen more than a year ago. Last year from mid-June to late July, triggered by an ex- tremely hot and dry early summer that decimated northern hemisphere wheat and corn crops, wheat experienced a dramatic run of more than three dollars per bushel to highs around $9.45 per bushel in Chicago. There is no comparable condition this year, as wheat production is much nearer nor- mal, so the price has given...
The wheat market knows it is past mid-harvest and that yields in the US have been better than expected so far. The idea that the crop in the US is expected to be smaller than "normal" has been built-in, adjusted and displayed for weeks. Seasonal lows are expected; again the market is well aware. The price adjustments in wheat that are actively being pursued are relatively small in scope and mostly based on indirect influences, like temperatures in the corn and soybean belt. On Tuesday, September Chicago wheat jumped 20 cents and closed at the...
Better than expected bushel-per-acre yields are being reported for the US wheat harvest, as of this week. And harvest is very close to halfway completed in the US. The USDA says the 18 states that represent nearly 90% of the wheat produced in this country are normally at 52% of harvest by this week each year. We are just a tad behind normal and the Pacific Northwest states, all three on the top-18 list, have yet to turn a header, although with the high temperatures of late, this will change very soon. Harvest at the halfway mark gives the...
Sometimes great trading wisdom can be found in old aphorisms or sayings. When asked whether it is better to be smart or lucky, one famous trader is said to have responded: "Some people are really lucky, and they are born smart, others are even smarter and they are born lucky." Most of us have heard "The trend is your friend" or even Calvin (speaking to Hobbes): "You know, Hobbes, some days even my lucky rocket ship underpants don't help." Right now, the saying that seems to fit the wheat market is, "Never sell a dull market short". That old...
New four-week low prices printed at all three major wheat futures exchanges Monday, but there was little pressure to follow through. Tuesday allowed a little bounce back up with no major news influence to account for it. The wheat market shadow is moving across the landscape slowly, as the combine crews are about to set up camp in Kansas fields, with Oklahoma running about 20% completed. Initial yields reported from Texas and Oklahoma are average. Weekly export sales for wheat were reported Monday in line with expectations. White wheat markets...
Corn supply: highest expected global ending stocks in the last eight years - negative. Soybean supply: largest global ending stocks of last seven years - negative. Wheat production: below-trend production in the US, but expanding production outside of the US leading to global ending stocks possibly the largest of the last four years. - negative. US dollar Index: weakening but still in two-year up-trend channel. - negative. Long-term interest rates trending higher with a growing sense that the Fed is about to tap the brakes on monetary eas- ing...
Market disruption? The overseas buyers of Pacific Northwest origin white wheat – Japan in particular – have suspended procurement. This interruption in market flow is due to the discovery of a patch of wheat in Oregon apparently linked to Monsanto’s once-proposed special genetically modified strain of glyphosate-resistant wheat, which was field tested from 1998 to 2005 in many regions, including the Pacific Northwest. While there are many GE (genetically engineered) strains of other crops being marketed and used in the US and else- where...
A s trade decision-makers, human beings are not gener- ally wired to be patient when a market (or anything else) takes longer than 60 to 90 days to move. The Chicago wheat July (new crop) futures contract has not trend- ed out of an 82-cent band between $7.41 and $6.59 since February 12, well over 100 calendar days and well beyond the capacity of most of us to be patient. The general slope of the period within this horizon-less Sargasso market is gently lower, although there was a two- day period of violence during which the market traded both...
The wheat market's price behavior over the last week has become cautious. The bears, that snarling, hairy group of negative-biased sellers, have become less willing to extend their positions, even as the bulls, like Fer- dinand, are sitting just quietly, smelling the flowers. The "large speculator" category of traders included in the Commodity Futures Trading Commission's (CFTC) weekly Commitment of Traders (COT) report are currently holding about 23,682 wheat futures contracts net "short" sold in Chicago . Historically speaking that is a relat...
I n 1972, 41 years ago, the front month futures traded in Chicago wheat reached a high of $2.73 per bushel, considered then an extremely high price. The low that year had been $1.41. The lid finally came off the next year when the then USSR kicked off "The Age of Volatility" with huge wheat buying for import. Wheat reached prices in 1973 that no one had ever seen before, with highs over $5.50 per bushel. It was wonderful for producers, if they managed to keep their wits about them amid the flood of money! Many new combines were purchased, but...
Wheat Outright Trading Rule #1: Always know the trend. WTR Rule #2: Hold or establish no posi- tion against the trend. WTR Rule #3: If no trend is identified, wait. The above rules apply to identified trends; that is, trends that a given trader has identified with confidence. Even a ca- sual observation by someone with little experience can yield a fairly powerful impression of trending tendencies. It's simple; just print out a current price chart of whatever is to be considered (here Chicago July wheat futures), prefer- ably one that includes...
A s the old screen door slaps shut and the grain markets step off the porch ready to go to work, the jacket collar is turned up against the chilly wet wind. Snow is in the forecast for some plains states and rain is slowing down the corn planters and starting to worry spring wheat planters in Canada. Late corn planting, which could lead to a shift of corn acreage to later-planted soybeans, is not a big concern yet. The optimum window of planting is generally open until the second week of May for a wide swath of the Midwest, and US producers of...
I n the 17 trading sessions since the USDA's last Quarterly Stocks Report on March 28, after which wheat prices in Chicago dropped 45 cents like a stone, the price of wheat has tried very hard to rally. Every day the market has searched for scraps of positive news like a Bride-to-be's search for a lost engagement ring. The drought news from the Midwest has lost its power to influence the market unless a resumption of dry and hot conditions emerges very soon. Recent freezing temperatures in the US have clearly slowed wheat crop development and...
The spring winds that are blowing across the US Mid- western wheat belt are still cold, but they don't quite have the winter teeth that can eat little wheat plants the way they did last week. Overall US Spring wheat planting progress is nil in North Dakota and is reported at only 6% com- plete overall compared to 12% normally. Moisture has improved slightly in some of the Western win- ter wheat states, but conditions have not changed much in the last 10 days. Taken as a whole, the weather factor for wheat is not yet enough to inspire market...
Wheat chart measurements allow an upside target of between $7.50 and $7.80 per bushel over the next month or so in Chicago July (new crop) futures, although there are no currently visible fundamental factors that show the potential for much more than that. That makes the headroom in wheat prices rather tight, at about 40 to 70 cents per bushel; not much in light of recent volatile price behavior. The downside from current levels in July wheat is back to the April fool's day low at $6.64, just 50 cents away as this is being written. So it is...
A nyone hoping last week for lower wheat prices re- ceived a nice gift in the form of a two-day, 70 cent de- cline in Chicago May futures across the Good Friday long weekend. Portland white wheat traders responded with a 50-cent drop in the same time. The trigger for such drama came from a USDA quarterly Grain Stocks inventory report and survey-based Planting Intentions report last Thursday that surprised the trade with much larger stocks of corn in storage than most professional observers had expected. Also, the largest intended acreage of cor...
A s it is with many things these days, all of the markets - wheat, oil, stocks, metals and weather - are hyper- conscious of the effect of government activities. Some more than others, but wheat has always had a particular fond- ness for USDA statistical reports. Contrary to common public opinion, the Department of Agriculture is not strictly set up to run the food stamp program. There is a group of highly professional and hardworking folks in Washington DC and in regional offices around the country whose responsibility it is to provide...
The wheat futures market as an entity exists to serve one ultimate purpose: to constantly re-discover the balancing point between real supply and demand going forward - that point being the daily/hourly/tick-by-tick price. After all the noise and emotion, along with plenty of "information" that may or may not be relevant, in a downward trend- ing price pattern, the market is seeking to lower the price for wheat enough to cause would-be buyers to step forward and purchase. On the other side of the coin, an upward market is attempting to draw...
