Serving Waitsburg, Dayton and the Touchet Valley
Serving Waitsburg, Dayton and the Touchet Valley
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U.S. Wheat exports have expanded from the pace of recent months, but not enough to cause the stress from demand that could change the current trend. The movement in Chicago futures in the last week has been in narrow daily ranges, contained above $6.97 and below $7.27 per bushel, matching the low last seen in late June of 2012 just as the price of wheat began a climb that reached $9.47 in the then-nearest July 2012 futures contract. There is buying support at this level, but strong reasons for global buyers to pay up for wheat are not yet on...
Chicago wheat futures prices have declined one dollar per bushel since January 22, from eight dollars down to seven. During the same period, Portland-delivered white wheat, our neighborhood specialty, has declined from about $8.62 to $8.45 - only 17 cents. The divergence between the two markets is more dramatic than normal, and can be attributed to a couple of factors. The Chicago soft red winter wheat market is much larger and more liquid than the white wheat market, making it attractive to larger entities such as large commercial firms that...
When I have a wheat position on, that is when I am either long (bought) or short (sold). Even after 30 years of analysis and trading of the wheat market, I still have a tendency to notice anything that affirms my position first. It just happens. I know that this is not an objective way to evaluate a market, and does not lead to the best decision-making. I also know that the awareness of this bias is the best and probably only antidote to its effects. So the fact that I own wheat fu- tures, say around $7.50, may lead me to seek reasons to own...
Rules for trading wheat, or anything else that has a changing price: (1) Know the trend before any de- cision is taken. (2) Do not trade or hold positions against the trend. (3) No trend, no trade. Sometimes the tough part is just identifying the trend. The definition could be a moving average of recent prices, or even as simple as putting a printed chart on the table and looking at it from a few feet away. If the pattern shows that "it" is moving lower in price, there is no reason to get out the mi- croscope, or do a page of calculus. Just...
The wheat market is not hungry. The mind of the great lumbering beast is not focused clearly, as spring is yet a time away and there is sufficient wheat to last for the next 90 days. Most of the major importers of the world were aggressively buying just a couple of months ago. They have covered their short-term requirements, leaving relatively small adjustments and opportunistic buying on the agenda. So the market wanders, with no particular place to go. As the calendar rolls onward, it appears that the Midwest- ern wheat and corn belts have...
For wheat markets, with January in the books, we are looking at only a few weeks until the US winter wheat price begins the "silly season" of spring weather volatility. This year promises some extra spice as the relatively small planted acreage combines with weak subsoil moisture across wide stretches of plains wheat fields, which adds up to market sensitivity to short-term weather swings. The market tone of the last week has been pretty low and lazy as, for the moment, the trade has little kindling with which to start a price fire. Production...
The great sages tell us that all things seek balance. "Seeking balance" implies at least some swinging back and forth across some "perfect" point, tracing a sinuous line as momentum rises and falls. With a little contemplation, the natural movement of the market becomes "intuitively obvious", as Professor Pyle, my old statistics instructor often said. It sure is easy to see a trend when one is looking backward in time. Thus a problem is created for us human beings, as we are all hard-wired to quickly identify patterns in things. The end...
A ll it takes to change the world from night to day is a USDA report. Last Friday's multiple statisti- cal summaries included quarterly wheat inventories, monthly supply and demand estimates and a US winter wheat acreage planted total. Every January these re- ports put a sort of cap on the old crop year, setting the stage for the new crop to become center of attention. This time the report was price-friendly, showing 300 million bushels less wheat in storage than the average analyst-on-the-street was expecting. Ending Stocks, the bottom line...
Last July, the bell- wether Chicago wheat contract was trading above $9.40 per bushel. Harvest was nearly completed in the mid-west and southeast. It was a small- er harvest than hoped, which pushed the price of wheat to a four-year high. Pacific Northwest white wheat bids were pushing $9 in mid July, even though the crop in this region was much better rela- tive to mid-western results. Since July, the price has ground toward lower levels. Chicago is at $7.54 ($1.50 lower) and Portland white wheat bids are around $8.41 (60 cents lower). From...
Tuesday morning's USDA monthly reports on supply and demand balance sheets had a surprise for the wheat trade: world wheat stocks were increased by 3.4 million metric tons over last month's reported total. The trade had expected some increase, but the surveyed pre-report guesses from prominent analysts around the country were uniformly too low. Another negative statistic was dumped on the market Tuesday morning in the USDA's reduction of projected US 2012-13 wheat exports by an additional 50 million bushels, the second cut in as many months....
People are struggling with decision making in all of the markets as we close in on the end of the year and the end of the Mayan calendar. Outside of those habitual seekers of reasons to "party as if there were no tomorrow," there is little value in all the dire predictions of cataclysm at the winter solstice on Dec. 21. According to a recent web post from a reasonably cred- ible source of information (NASA) in a world awash with nonsense, just as your desk calendar ends on Dec. 31 and world keeps going on, the same goes for the Mayan calendar,...
We may finally be approaching a market consensus that allows a breakout of the more-than-4-monthold trading range for wheat prices. Even though there is a reasonable technical chart-based rational for lower prices, the variety of fundamental factors now emerging in the market's mind is all positive. This week, the USDA released the last crop condition update until spring. The U.S. winter wheat crop condition has continued to deteriorate due to lingering drought. The government reported Monday that only 33 percent of the national winter wheat...
The price of Chicago soft red winter wheat on Tuesday, Nov. 20 was 70 cents below the highest price traded on November (a week ago Friday). The slightly down- ward sloping trading range is unbroken, but is being threat- ened. The current price is a battleground. Buyers that see wheat at the low end of its range about to return to higher lev- els as expectations for increased U.S. exports finally emerge. Sellers see the weak pace of exports to date and importers tak- ing only small amounts from the market at a time along with a potential range-f...
On Friday Nov. 9, the Chicago wheat March contract briefly touched $9.29 per bushel. By 11 a.m. the next Tuesday, the same contract was trading actively at $8.59, 70 cents per bushel lower. This little bit of drama came in the face of the low- est overall national winter wheat crop quality rating in the U.S. since records have been kept in 1986, with reports of good-to-excellent wheat condition assessed at just 39 percent last week and anticipated to continue to decline into the winter wheat dormancy season. The 20-year average for this rating...
The path of least resistance for wheat is positive this week. The election dominated most of the trade's mental effort until Wednesday at least, although there really is no mandate from either party that could drive wheat or other prices rapidly in any particular direction. There is a lot more on the table than economic policy, even though a listening outsider would not think so, although clarity on fiscal outlook is valuable stuff, a kind of relief-based tonic for the markets in general, so the balance of the markets may take something positiv...
The biggest news this week for the wheat market was not about the wheat market. Hurricane Sandy shut down New York markets for a couple of days, squeezing the damper down on every other market. Money decision-makers don't like to take significant actions in a half-absent market, and the money-boys do have an impact on commodity futures, including wheat, virtually every day. Outside of outside markets, wheat has little solid footing on any new fundamental changes. The relatively tight range of prices that has contained wheat markets for the...
On Tuesday morning, the wheat market was camped out squarely on the middle of the range line going all the way back to the third week of July. Chicago leading futures contracts were at about $8.70 per bushel, while Portland white wheat showed $8.78 or so. The center trend line is gently lower for the period. If Chicago futures break below $8.25-$8.35 in the December contract it will imply accelerating weakness. If the market can find the drivers to push above $9, a new upward trend-line will be created. Until one of these happens, it seems...
We live in an age of "low drama." Not the high drama of large movements or of a renaissance, but more of small, inward- pointing, divisive motivations, sometimes vicious and often without discernible cause. The world seems dif- ficult and treacherous. The wheat market has reflected such a pattern since the climax of high prices driven by drought during the summer that ended in late July. Prices have moved in sudden jumps, stops and starts in a moderate, $1 per bushel range. In the last week, Chicago wheat established the lowest price point...
The fundamental statistics around wheat produc- tion and consumption in the U.S. have a bottom line: USDA projects 698 million bushels as an "ending stock" level of wheat for this year. The con- sumption of wheat as a feed source was larger than expected because of such high corn prices in the last quarter, which is what led to the decrease in the Sept. 1 USDA stocks report that surprised the trade into a 44-cent price rally the day of the report. Beyond that short-term (one-day) rally, the price of wheat has returned once again to the bottom...
When the wheat market jumps 44 cents in one session, as Chicago wheat did last Friday, Sept. 28, and then turns back down 33 cents per bushel over the next couple of days, most wheat producers or owners just shake their heads and sigh. What is the appropriate behavior when a market seems crazy? Even with all this "shake, rattle and roll" the trend has not changed. It is pretty clear that if the price of wheat climbs up to or just above $9 per bushel in Chicago (about $8.90 for white wheat), there are willing sellers waiting. By the same token,...
Wheat prices along with many other markets this week are waiting for a push from any domi- nant factor that will allow a direction. Chicago wheat managed to gain about 15 cents per bushel since last week at this time, but in this environment that is a mere wiggle. White wheat prices for Portland delivery also gained about 14 cents in the same week with current levels near $8.78 per bushel. Few are willing to take major positions ahead of this Friday's USDA Grain Stocks as of Sept. 1 and Small Grains Summary Reports. The trade, including analyst...
The trend in wheat has not been positive for nine weeks, although depending on what week you chose, it was either at the high end or the low end of an 88-cent range that was defined right at the beginning of the period since the last two weeks of July, with the upper end around $9.44 and the lower about $8.56. 88 cents per bushel is a lot of money. A single futures contract, or "one-lot", is 5,000 bushels. Around here that might represent all of the production of 45 to 65 acres of good wheat ground. In the Midwest it reaches 100 acres or more....
This just in from the Department of Redundancy Department: The wheat market is in a sideways pattern, with a range of just under 90 cents per bushel in Chicago soft red winter wheat, slightly more for Kansas City hard red winter, $1.23 from high to low in Minneapolis hard red spring wheat. White wheat prices in Portland have swung from about $8.30 to about $9.05, settling early this week at about $8.76, just over the center of the 75-cent high-low range since late July. Global import buyers have been active in the usual Northern hemisphere...
There are corn shipments from Brazil unloading on the East coast for feeders in the mid-coastal region. The price of corn has arrived at a tipping point that is the market must seek a price for United States corn that does not destroy demand any further than it has already. On the other hand too much relaxation of prices could kick demand up enough to over-run available supplies being harvested now. The price range for corn is thus de- fined loosely between about $8.50 and $7.50 for a while. The recent range for December corn is between $8.49 o...
The wheat market is hunting for a mandate. The highest price of the summer to date is now well more than a month back, on July 23 for Chicago December futures at $9.47 per bushel, and July 20 for white wheat delivered in Portland at $9.05. This week's Chicago is around 89 cents lower and Portland is down about 42 cents. The chart pattern is a (relatively) slow decline in a 20-25 cent range. It is sometimes useful to look at the wheat market as if it is an independent creature with emotions, motivations and ideas. Right now, the crittur is wan-...
