Wheat Futures Prices Near Term

Wheat Futures Prices

Wheat futures in the U.S. should continue to go nowhere for some time ahead unless something extraordinary happens where huge losses come about, which could probably only happen in Australia.

Production estimates for wheat continue to increase while demand decreases, cutting back significantly on wheat exports.

The USDA estimated 2009 U.S. wheat production was raised to 2.184 billion bushels from its July estimate of 2.112 billion, while the global wheat crop increased to 659.3 million tons from 656.5 million tons last month. The USDA's estimate for global ending stocks -- or what is left over after supply and demand are accounted for - also increased.

Wheat prices have plunged over the past year as global supplies have increased, and there is little sign of anything changing.

The continuing bearish information strengthened "the prevailing tone of the wheat market - one adrift in search of a persuasive fundamental storyline and dependant upon direction from other commodities," J.P. Morgan analyst Lewis Hagedorn said. "Absent a large decline in Australian production or demonstration of increasing global demand for protein wheat, prices appear likely to continue a gradual downward slide."

CBOT wheat will probably continue to experience new contract lows, although losses will be limited during the medium term by possible strength in CBOT corn and soybeans. Wheat prices should generally remain rangebound during the next couple of months.

Projections are it's possible September wheat could drop as low as $4.50 or December wheat to touch $4.75. The top end of the contracts' ranges should be about $5.25 for September, assuming a rally in beans and corn comes about.

A lot of negative things would have to happen across the world in order for any type of rally to happen, along with El Niño drying up Australian wheat fields, a continuing wheat disaster in Argentina, and an ongoing rain shortage in the Black Sea Region

But even with all of that happening, there's no surety, as the other places in the world have shored up their domestic wheat production, which is the real mitigating factor in the overall scheme of things.

At best there would be a mild recovery of wheat prices assuming all the above happens, but that doesn't guarantee the U.S. would be getting that business.

Wheat Futures Prices