Corn, wheat and beans are hovering near the lows set this past decade and it appears that there is a reluctance to press the market even though corn and bean carryover projections are very comfortable, if not excessive!…………………………………….Respect might be given to the stage of crop development in the southern hemisphere and new lows for the move might be set as we approach deliveries against the December contracts if no extensive weather scares develop in Argentina, Australia or Brazil…………………………………Wheat and oats have the tightest stocks/use ratio in the grain world yet, they’ll need help from corn and beans to generate enough enthusiasm to sustain a rally……………………………………
Not a lot of excitement in the spreads as there’s room to widen corn and beans yet, there’s not enough profit potential for the average speculator to cover costs…………………………..yet, there’s no reason to bull spread as harvest continues and storage tightness looms…………………………Wheat has all the ingredients to see spreads tighten yet, it’s a matter of timing as we’re approaching harvest in the southern hemisphere as well as having the Great Lakes close in mid December………………….We’re still at a point in the crop year when millers are comfortable with inventory and farmers reluctant to sell new crop as too many hurdles need to be cleared and there’s nothing exciting about present values………………………………Wheat/corn has slipped back to $1.40 after seeing its zenith above $2 in early August…………………………..Historically, this spread “likes” $0.80 to $1.20 yet, we can see massive deviations from the norm in years when there is a shortage of wheat and that potential exists right now so, staying a little above the norm is apropos!!! We are at the point in the season when farmers will not plant any more winter wheat as there’s not enough time, in the typical year, to develop a good stand! Have we enticed enough acres out of corn and beans? The USDA will let us know in the January report.
Outside influences remain a concern as trade pacts, world unrest and oil and energy prices as well as central banks jockeying with monetary policy stand out……………………………..We are keeping our eyes open!
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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