Wheat Tries To Lead Grains Out Of Slump
Some shifting occurring within wheat complex.
Bryce Knorr
Published: Nov 16, 2008
The wheat market hasn't exactly been the leader of the pack recently. But the market found itself in just that position last week, trying to rally in the face of pretty much overwhelming bearish forces in the outside trade that dominated prices this fall.
Given the magnitude of the task, wheat did okay. And even while most of the buying was described as short covering, open interest did start to increase at times, suggesting some tentative new buying coming into play.
Even within the complex there was some shifting going on. Chicago, long the worst of a bad lot, picked up a little steam after USDA cuts its forecast for soft red wheat carryout on improved exports, while otherwise disappointing traders by not cutting overall ending stocks despite a strong start to the export season.
USDA did cut its estimate of seed usage, saying winter wheat seeding was less than anticipated. That also raised prospects that farmers in the east shied away from soft red due to weak basis and the late fall harvest.
Even soft red winter wheat basis showed some improvement, though it remains historically wide as December delivery approaches.
The good news for wheat is that milling quality supplies remain rather tight despite huge global crop. The bad news is that many buyers care less about quality when their pocketbooks are pinched. That's making it harder for the U.S. to complete, especially with the dollar regaining some stature recently.
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Tagged: wheat, usda, winter wheat, farmfutures, farmfutures.com
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