CROPS

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.

The slow pace of exports after harvest had been expected to pick up as Russia and other price leaders ran out of exportable supplies late in the season, but the surge in US sales has not emerged. If the numbers are to be believed, the world appetite for wheat is smaller this year, not really a surprise in the economic confu­sion that is becoming all too familiar.

The wheat market responded as might be expected Tuesday, with a rapid decline to new, six month lows. March wheat futures in Chicago dropped 30 cents in the five hours following release of the USDA reports, trading as low as $8.16 per bushel before the close. White wheat prices in Portland for March delivery were posted at $8.69 to $8.85, pushing Walla Walla prices from $8.45 Monday afternoon to $8.18 Tuesday morning.

The wheat charts have been threatening a decline if the bottom of the long-standing channel pattern of price movement was penetrated. Tuesday's market behavior fit the classic "bottom fell out" definition of a violent end to a well-established pattern.

The target for Chicago wheat prices according to the chart boys is near $8.00, where there is an old chart gap, created in the first week of July 2012 when the price jumped from $8.00 to about $8.09 without "trad­ing through" the intervening price level afterward.

This wheat market event is historically common enough, although not welcome. It will eventually have the effect of increasing the amount of wheat consumed and thereby is self-correcting, as most extreme market behavior is. It is less than it might have been.

Decisions taken under today's circumstances maybe strained and stressful, but there are still opportunities, although capturing them requires time and attention to the market's behavior, not to mention patience.

Information and opinions contained herein come from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your ac­count. All funds committed should be risk capital.