We’re at that time of year and that phase of crop development when anything can happen and funds are short and farmers are long and we’re waiting to see how it plays out. There was every reason to pummel the wheat market today as the warm and wet forecast for the Heartland is perfect for the crop at this stage of development yet, funds might have reach their short saturation and are reluctant to add. The question remains is if there will be enough farmer selling at harvest for funds to escape with a healthy profit. Traditionally, producers sell off of the combine and elevators and warehousemen decide just how long to store and that depends on basis levels. The advantage is always with the elevator as storage fees more than compensate for any discount with non milling quality grades. Wheat just doesn’t disappear like it did prior to the onset of the vomitoxin tweaks. It pays to hold onto garbage.
Be prepared to experience weather anxiety jumps and dives the next few weeks. The USDA suggested that we’ve got a better cushion of old crop stocks with last week’s reports and this might be verified next Tuesday with the April Supply/Demand report. This is traditionally one of the most benign reports which the USDA releases as the stocks and plantings report at the end of March always makes a bigger splash. The first wheat yield projection is released in May. This report is really just the opinion of respected USDA economists and the stocks report foreshadows the tweakage in carryover and usage.
Keep an eye on the forecasts as the old adage of losing a bushel a day in average national yield for corn plantings after May 10 might persuade shorts to cover if it looks like Mother Nature might delay us a little more. The acreage figure on Friday was questioned going into the report given the flooding and the trade might believe that the final planting figure could be several million acres less. We just have to play it out.
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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