Please remember that the USDA releases its first winter wheat production estimate at 11 on Friday. We’ll also get the usual international production figures and domestic and international Supply/Demand projections. Respect the USDA!
The 2019/2020 crop year is starting with some underlying bullishness as winter wheat acreage is the lightest it’s been in a century and corn, oats, durum and spring wheat are getting in the ground a little late. But, there’s ample sub and top soil throughout the nation which allows us to withstand a little heat and/or dryness later in the year. On the demand side we’re still dealing with a Federal Reserve and other central banks which appear to have gotten religion and aren’t printing helicopter money anymore . All the quantitative easing from 2001 to 2016 may have been a major factor which sparked rallies in all commodities. Money might mean something again! The rise of crypto currencies and gold backed currency Federal Reserve nominees suggests that the issue of fiat money may start being addressed. So much for macroeconomics.
Spreads remain on the defensive yet, there’s only so much corn and beans can go with storage rates constant. Please, remember that wheat storage rates are a moving target as we can always widen past the .0165 cents/bushel/day presently charged by deliverable elevators. Space is still an issue as we’ve got lots of nearby supply. The quality of the upcoming winter wheat harvest will have an impact on spread direction. It matters! Producers who have missed hedging opportunities for the 2019/2020 crop year may start looking at the 2020 and 2021 new crop contracts for opportunities in corn and beans.
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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