Some traders are still uncomfortable with the Chicago wheat contract and the ability of the issuer to put out stocks laden with vomitoxin levels which are deemed by the FDA (Federal Drug Administration) as unfit for human consumption… for raw wheat the old limit was 2 ppm and the limit for finished products is 1 ppm…………………..this may inherently cause millers and shippers to think twice before taking delivery and risking brand contamination if they use these tainted stocks when blending non tainted bushels to attain a vomitoxin level of less than 2 parts per million for raw wheat……………………….Simply put, if you stop Chicago futures you will have to negotiate with the warehouse/elevator holding the certificates to ensure that the inventory is acceptable to attain the 1 ppm cleaned product limit…………..even with the 20 cent discount of stocks at 3 ppm there are commercials who will not take the risk of tainting their brand…………………..unless things get really crazy and every mill is scrambling for something to grind and stay open for business…………………………..So, buyer beware!………………………………… And Kansas City still under Chicago is historically abnormal…………………………….Deliverable Houses may stop Kansas City December and sell Chicago December and get busy loading it out and shipping it up to Chicago just to keep the speculative community a little more honest and less outrageous with using Chicago when entering any wheat trade, whether long or short……………..The cash market still matters………….especially during deliveries…………………………………
We’ll know tonight what is delivered against all December contracts for ownership starting on December 3………………….Corn was expected to be healthy as was soy oil with soy meal and wheat numbers up for debate……………………………..
Traders are hoping and praying that an agreement may be reached this weekend in Buenos Aires at the G 20 meetings……………………….Also, Russia, for whatever reason and motivation is making moves via the Seas and in crude oil production to make its presence “not forgotten” and has and will have market implications………especially for wheat!
The South American weather situation appears to be very conducive for crop development…………………………….Chairman Powell’s announcement of temporarily halting its policy of quantitative tightening might be positive for all commodity prices……………………… The USDA report on December 11 typically gets no respect as supply/demand figures are the only things adjusted……………..Regardless, the USDA is full of surprises as exhibited by last month’s census changes with China……………………………..Treat all reports with respect and go in as even and open minded as possible…………………………….
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.
Steve Bruce
Walsh Trading
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