Wheat is special!
Unlike corn and beans, farmers do not typically hold on to inventory and board rallies don’t get it to move but, basis pops do the work to get it to where it is desired! And, there’s still a little concern and contention with the vomitoxin variable with deliverable stocks. Some end users are reluctant to go all the way with futures and deal with deliveries sensing that it’s just easier to pay up in the cash market to be assured that what they purchase is less than 1 part per million vomitoxin. Why risk your brand if you go all the way in receive the FDA unsafe for human consumption stocks, even if you have enough good stocks to blend? The March contract will be fun yet, if there truly is a quality deficit then the May contract will be frightening if the Southern harvest does not make grade!
We still sense that it’s the time of the year when there’s more upside potential than downside risk given that we’re are near decade lows. Corn and beans may rally in sympathy yet, we still have to contend with farmer selling as we approach Spring as well as South American harvest!
The USDA rewards the market with all of its figures which were delayed because of the partial government shutdown this Friday at 11:00 Chicago time. Traders have been talking and it appears that the consensus is that December 1 stocks might be lighter than previously projected because of smaller final production figures in the 2018/2019 corn and bean crops. Supply/Demand projections will be as of February 1 and the general tone is that corn and bean carryover might be lighter than before while wheat may be slightly larger. Winter wheat seeding figures are expected to be around 1 million acres less than what was planted in 2018/2019.
Still hoping and praying for resolutions with the Chinese trade deal as well as border security. The path that the Federal Reserve takes with monetary policy is anyone’s guess. Domestic weather becomes more serious as per winter wheat development in the next few weeks.
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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