CROPS

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 reasonable to expect the price of wheat to stay within these borders at least until the Chicago May contract reaches delivery and expiration in the next three to four weeks.

The much-discussed drought condition in the winter wheat belt is smaller and weaker than it was last fall, but conditions among wheat states vary widely. The weekly wheat crop condition reports show Nebraska (the heart of the drought area) at only 11% good-to-excellent, Kansas at 56%, Oklahoma at 28%, and Texas at 17%. The Pacific Northwest reports Washington winter wheat at 78%, Or- egon at 67% and Idaho at 60% good-to-excellent. These are somewhat worse conditions than we are used to seeing this time of year. No market mandate in this data.

Behind wheat, US corn markets are dealing with de- clining export sales, reaching the lowest market share of global corn trade on record. That's a decline from 60-80% of world corn trade in the late 1980's through the 1990's to near 25% today. This factor is influential for wheat prices, as consumption of wheat as feed has been a larger issue in recent months. A healthy corn crop this fall would help shift the range in which wheat will be trading to a lower tone.

The trend has not changed for wheat, with a long decline that started back in Novem- ber of 2012 still intact. The world is not about to run out of wheat, but the balance of trade seems likely to allow US wheat values to hold cur- rent levels for now.

Information and opinions contained herein come from sources believed to be reli- able, but are not guaranteed as to accuracy or complete- ness. The risk of loss in trad- ing futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or op- tions, it is possible to lose more than the full value of your account. All funds com- mitted should be risk capital.