The window of opportunity for wheat business is open as the USA might be the most reliable supplier of decent quality until new crop in last half May and June. Make hay while the sun shines! Egypt, Bangladesh and others might be forced to look to the US Gulf for quality hard red wheat But, as corn/wheat approaches $1.50, at this point of the crop year, the market might not be feeding any poor quality wheat as millers might pull out their alchemy bag of tricks and perform the necessary magic and change some blends to make do until new crop. Yet, we have the potential for a screamer this late Spring and early Summer if the Northern Hemisphere has any hiccups with winter wheat production and quality. There may be “a story” in wheat for a couple of months. The present running moving average suggests that storage rates might decrease when the new calculations are set on February 22.
Corn might be tagging along with wheat as fundamentals are a little more promising to feed grains than oilseeds. Basis levels appear to be stable yet the trade might still be a little reluctant to hold onto March futures as delivery is still the best sale. There might not be a lot left in bear spreading corn yet, we sense that there is no reason for spreads to come in as the world is still comfortable with near term supply.
South American harvest historically gets into full swing soon and the recent spate of hot and dry in Brazil might aid and abet activity. Despite the attitude that Mother Nature decreased yield potential with the temperatures and lack of precipitation this last month expectations are that a very large crop will be coming to market. Spreads could remain on the defensive through May.
The old timers say that we need to feed the bull every day! We might have to have real business verified to keep the rally going tomorrow. Some technical gurus are saying that a close over 521 1/2 Chicago March suggests a move up to 531 and then, maybe 541. Wheat appears to be the “mover and shaker” for the time being!
The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.
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