CROPS

Wheat prices are in a period in lacking a story of its own powerful enough to push the market into new patterns, although with the spring weather season upon us, the market will be more interesting.

Chicago contracts have confirmed the range again in the last few trading sessions, although since Dec. 15 lows, each low has been higher and each high also a bit higher, the definition of an uptrend, with swings of about 80 cents per bushel.

The May contract low of $6.28 per bushel on Feb. 16 (repeated Tuesday the 21st) is now a key point to watch. If Chicago manages to hold above this point, the target becomes $6.90 or so, about 50 cents higher. A failure to hold this level will be seen as a selling signal by many.

Corn is dominating with a negative tone. In recent years, ethanol production has consumed enough corn to be a positive influence, but now this favorite new source of demand is falling on hard times. US gasoline consumption is running about 3 percent below last year according to the statisticians, and Brazilian imports of ethanol from the U.S. are declining. Some U.S. ethanol producers have shut down, and remaining larger producers are faced with full inventories. Profitability for ethanol production is lower, partly due to the expiration of subsidies at the end of 2011.

Wheat must find a factor that will lift it back above corn to break the range. World wheat stocks are at high levels, the long term trend is flat to negative, but the present price is in the lower half of the now-familiar range and spring will bring new volatility.

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