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Weekly Wheat Review

If a picture is worth a thousand words, wheat charts are a book most growers don't want to read. It's hard to find a chart in the complex that isn't bearish.

Kansas City July, which once held plenty of promise, slipped to new lows, honing in on the $7 level it last visited a year ago. Weekly nearby charts in Chicago and KC are threatening to break below long-term support lines off major lows, threatening a larger downturn. Even spring wheat, which faced planting delays that could knock out 1 million acres or more, couldn't hold $8 on new crop contracts.

If the charts are correct, wheat not only is getting cheaper, it could get a whole lot cheaper. For that to happen speculative hedge funds would have to extend their already short positions substantially more.

Moreover, more corn should be available this year, decreasing one source of demand.  Argentina won't be exporting much if any wheat this year, but that haven't been a factor in the international market for a while.

The good news for many producers is Revenue Protection. Harvest prices are being set now for some hard red winter wheat contracts, with the average around $1.45 lower than the base price discovered last fall for Kansas, Texas and Oklahoma. But come July 1, these growers have no downside protection. Basis in some areas is stronger than normal, suggesting potential to reduce the risk of falling prices by selling cash wheat and taking an RP check if available on at least a portion of unpriced production.

Growers elsewhere will have longer to evaluate the market, and short old crop corn supplies could provide stronger feed demand than normal. After new crop corn hits the pipeline, however, the gut slot this fall could be significant.

Download the complete Weekly Wheat Review report using the link below.

Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Adviser. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.