CROPS

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 positive from that once election fever comes down.

The first crop condition rating for U.S. winter wheat was not healthy, showing only 40 percent of the crop rated good- to-excellent, the lowest number since 1986. It remains too dry in the greater Midwestern wheat states and the northern plains. Wheat prices have been ratcheting back toward the high end of the 17-week range, with Chicago December contracts in the mid-$8.70's Tuesday afternoon. Portland white wheat is also solid at $8.92 for November delivery.

Australian wheat production potential has been shrinking steadily, providing a background note for U.S. wheat prices in anticipation of better wheat export sales later. Certainly it is well-known that Russia is not going to be setting the low price for the rest of the season, as they have sold everything available at this point. Argentina is suffering from excessive moisture, another mild positive in the background.

The trade is anticipating Friday's USDA statistical reports to bring only nominal adjustments to the wheat and grain balance sheets, although that is the setup for surprises, the market already knows most of the numbers at this point.

On balance the next few weeks seem to be slanted to the northeast quadrant of the charts. Maybe the big rangebreak will finally emerge!

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