Wheat Tries to Turn the Corner
Buying steady even as speculators become more bearish.
Bryce Knorr
Published: Jul 13, 2009
After following the rest of the market lower last week on bearish USDA reports, the wheat market is trying to confirm harvest lows. Prices surged on Monday, and there's evidence the rally is more than short covering. Friday's Commitment of Traders shows index funds are steady buyers, even as speculators became more bearish.
Still, it's hard to get terribly excited long-term for wheat. While production is down around the world, demand doesn't look like it's going anywhere. The U.S. has more than adequate supplies that will only go down if exports surge. And, exports are likely to surge only if there's a big disaster in the southern hemisphere.
That's still possible, of course, with an El Nino picking up steam. But it's important to remember that even if production goes down in Australia and Argentina, buyers will still be price sensitive.
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