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
Showing posts with label Weather Damage. Show all posts
Showing posts with label Weather Damage. Show all posts
Saturday, August 15, 2009
Sunday, January 25, 2009
Wheat: Argentina Wheat Market Crumbling
Although a number of crops are failing in Argentina, including corn and soy, wheat is also participating in the destructive drought that is crushing the entire agriculture sector of Argentina.
The commodity grain sector hasn't moved with the metals market, as demand for everything is down, even though people still need to eat, as well as their livestock.
This is particularly difficult for Argentina, who is one of the top exporters of grains in the world, and so depend on so much on it for the welfare of the country.
At this time things are so bad that farmers have given up trying to salvage their wheat crop, and instead are focusing on saving their cattle. Even if the cattle are saved, they will be difficult to breed because of the lack of food for them.
According to farmers in Argentina, wheat fields are as dried as they can be, with little hope of salvaging a wheat crop, as there is little to put in storage.
Unfortunately for everyone involved, the wheat planting, wheat yield and wheat harvest around the world has been huge, and so the drought in Argentina is hurting them without benefiting anyone else.
Even though farmers in the U.S. were hoping to get some of the trade usually done by Argentina with Brazil, it looks like it won't have much impact on wheat exports from the U.S., and so Argentines will be the ones to suffer.
So in spite of this, wheat futures aren't moving much because of this, although there was a slight move upward recently based on wheat news from the country. But it's not sustainable.
Weather predictions in the country are, as usual, contradictory, and so some say the drought will end with rain coming, and others say it won't amount to much. Either way, wheat farmers in Argentina, and its people, are in for a long struggle as grain prices continue to fall.
For Argentina, this is the worst year for drought and lack of rain since 1971, and even if there is a major change in the weather patterns, the wheat harvest will be way down, as wheat production grinds to a halt.
Along with the wheat crop, other crops suffering are corn and soy, with silos there to store the crops are in many cases empty or half full.
Even though soy is down, it is still on the positive side, and is projected to increase in production by 7 percent. The corn harvest will fall by about 27 percent, and wheat production will be hit the most from the poor growing season projected to plunge by 44 percent over the 2008-2009 harvesting season.
Grains are so scarce in the country, that the Argentine government is has even lowered the minimum weight requirements to slaughter cattle so the farmers can make some money off them before they are worthless or die.
It'll take some time to recover from this wheat disaster, as Argentina will suffer probably for a couple years or more trying to come back from this natural disaster.
In a normal year this would have boosted wheat prices tremendously, but the wheat harvest has been so plentiful globally, that it will easily absorb the losses without making a difference in wheat prices.
The commodity grain sector hasn't moved with the metals market, as demand for everything is down, even though people still need to eat, as well as their livestock.
This is particularly difficult for Argentina, who is one of the top exporters of grains in the world, and so depend on so much on it for the welfare of the country.
At this time things are so bad that farmers have given up trying to salvage their wheat crop, and instead are focusing on saving their cattle. Even if the cattle are saved, they will be difficult to breed because of the lack of food for them.
According to farmers in Argentina, wheat fields are as dried as they can be, with little hope of salvaging a wheat crop, as there is little to put in storage.
Unfortunately for everyone involved, the wheat planting, wheat yield and wheat harvest around the world has been huge, and so the drought in Argentina is hurting them without benefiting anyone else.
Even though farmers in the U.S. were hoping to get some of the trade usually done by Argentina with Brazil, it looks like it won't have much impact on wheat exports from the U.S., and so Argentines will be the ones to suffer.
So in spite of this, wheat futures aren't moving much because of this, although there was a slight move upward recently based on wheat news from the country. But it's not sustainable.
Weather predictions in the country are, as usual, contradictory, and so some say the drought will end with rain coming, and others say it won't amount to much. Either way, wheat farmers in Argentina, and its people, are in for a long struggle as grain prices continue to fall.
For Argentina, this is the worst year for drought and lack of rain since 1971, and even if there is a major change in the weather patterns, the wheat harvest will be way down, as wheat production grinds to a halt.
Along with the wheat crop, other crops suffering are corn and soy, with silos there to store the crops are in many cases empty or half full.
Even though soy is down, it is still on the positive side, and is projected to increase in production by 7 percent. The corn harvest will fall by about 27 percent, and wheat production will be hit the most from the poor growing season projected to plunge by 44 percent over the 2008-2009 harvesting season.
Grains are so scarce in the country, that the Argentine government is has even lowered the minimum weight requirements to slaughter cattle so the farmers can make some money off them before they are worthless or die.
It'll take some time to recover from this wheat disaster, as Argentina will suffer probably for a couple years or more trying to come back from this natural disaster.
In a normal year this would have boosted wheat prices tremendously, but the wheat harvest has been so plentiful globally, that it will easily absorb the losses without making a difference in wheat prices.
Friday, January 16, 2009
Wheat Prices Will Fall as Demand Dries Up
Some traders are looking for any tidbit of information to keep the wheat prices up, but I don't think they can hold for too long.
Much of the argument for wheat prices holding is the dry weather in a couple regions in South America.
But with prices higher now than the fundamentals warrant, it's hard to believe people seriously think losing a little bit of the global crop will really make much difference. There's so much wheat available that it would take something of epic proportions to keep prices up.
Even add in the possibility that the cold front in the U.S. may damage some wheat crop if there isn't any snow cover, and that still doesn't change the fact of the huge global supply available.
Most of what's been driving the prices up over the last couple months has been the re-entry of some funds into the market, along with the soybean rally. Over the last 6 weeks wheat futures have risen approximately 25 percent.
With demand so low, I don't see that being able to continue in any sustainable way in the months ahead.
The one unknown is when the U.S. dollar will start collapsing under the weight of the huge amounts of money being used to stimulate the U.S. economy. That would of course make exporting wheat much cheaper, and could increase sales.
The problem is there's no way of knowing how long that will take, so it can only be watched for, not counted on, as far as timing goes. When it does happen though, it will be a boon to commodity producers in the U.S.
Concerning demand, the USDA on Monday projected the ending stocks for U.S. wheat in 2008 - 2009 stand at 655 million bushels, an increase of 32 million from December's estimates. With nowhere to really send that wheat, as demand is so soft and wheat so plentiful, it will stay in storage until there's someone to sell it to.
Even that will continue to be a challenge as for the same time period, wheat consumption accroding to the USDA estimates, are being lowered.
Livestock markets have no interest at this time in buying either, as they're struggling as much as anyone else, with exports down and profits under pressure. Cost inputs and lower priced global wheat remains major factors in these decisions.
While there's nothing that can be done about it now, the real problem stems from last years' prices, where everything went right for U.S. wheat farmers, and supply was down globally. Farmers responded predictably by putting more wheat in the ground for this season, contributing in part to the current glut.
This wasn't too smart, as the chances of having two years in a row like that are almost nil, and they knew foreign farmers would respond the same at lower costs. Farmers, as well as anybody in business must learn if they missed it this time around, there's not much guarantee they hit it the next.
It's expected that spring wheat acreage planted this year will drop, especially if prices don't come back, which they are highly unlikely to do.
Much of the argument for wheat prices holding is the dry weather in a couple regions in South America.
But with prices higher now than the fundamentals warrant, it's hard to believe people seriously think losing a little bit of the global crop will really make much difference. There's so much wheat available that it would take something of epic proportions to keep prices up.
Even add in the possibility that the cold front in the U.S. may damage some wheat crop if there isn't any snow cover, and that still doesn't change the fact of the huge global supply available.
Most of what's been driving the prices up over the last couple months has been the re-entry of some funds into the market, along with the soybean rally. Over the last 6 weeks wheat futures have risen approximately 25 percent.
With demand so low, I don't see that being able to continue in any sustainable way in the months ahead.
The one unknown is when the U.S. dollar will start collapsing under the weight of the huge amounts of money being used to stimulate the U.S. economy. That would of course make exporting wheat much cheaper, and could increase sales.
The problem is there's no way of knowing how long that will take, so it can only be watched for, not counted on, as far as timing goes. When it does happen though, it will be a boon to commodity producers in the U.S.
Concerning demand, the USDA on Monday projected the ending stocks for U.S. wheat in 2008 - 2009 stand at 655 million bushels, an increase of 32 million from December's estimates. With nowhere to really send that wheat, as demand is so soft and wheat so plentiful, it will stay in storage until there's someone to sell it to.
Even that will continue to be a challenge as for the same time period, wheat consumption accroding to the USDA estimates, are being lowered.
Livestock markets have no interest at this time in buying either, as they're struggling as much as anyone else, with exports down and profits under pressure. Cost inputs and lower priced global wheat remains major factors in these decisions.
While there's nothing that can be done about it now, the real problem stems from last years' prices, where everything went right for U.S. wheat farmers, and supply was down globally. Farmers responded predictably by putting more wheat in the ground for this season, contributing in part to the current glut.
This wasn't too smart, as the chances of having two years in a row like that are almost nil, and they knew foreign farmers would respond the same at lower costs. Farmers, as well as anybody in business must learn if they missed it this time around, there's not much guarantee they hit it the next.
It's expected that spring wheat acreage planted this year will drop, especially if prices don't come back, which they are highly unlikely to do.
Wednesday, January 14, 2009
DJ US Wheat Review: Ends Up Amid Talk About Frigid Weather
CHICAGO, Jan 14, 2009 (Dow Jones Commodities News via Comtex) --
By Tom Polansek
Of DOW JONES NEWSWIRES
U.S. wheat futures settled higher Wednesday in choppy trading amid worries about the potential for plant damage from a deep freeze in the U.S.
Chicago Board of Trade March wheat futures gained 3 1/2 cents to $5.74 1/4 per bushel. Kansas City Board of Trade March wheat edged up 3 cents to $6.00, and Minneapolis Grain Exchange March wheat added 4 3/4 cents to $6.41 3/4.
The markets seemed to find support from fears that subzero temperatures are threatening winter wheat that does not have adequate snow cover, traders said. Soft red winter wheat in portions of southern Illinois appears to be most at risk for damage from winterkill, which reduces yields, they said.
Still, it's difficult to get too bulled up about the weather because the crop doesn't grow during the winter, an analyst said. Farmers can't determine the full extent of winterkill damage until plants break dormancy in spring.
"In reality, you're not going to get the market to bite off on that until you get into April," an analyst said about winterkill fears.
Trading was thin and choppy for much of the day session, so it's hard to read too much into the activity, a CBOT floor trader said. Commodity funds bought an estimated 1,000 contracts.
CBOT March wheat traded in a range of $5.62 to $5.80 in open outcry trading. CBOT March wheat has support at its 40-day moving average around $5.57 1/2, an analyst said.
The firm close marked the second consecutive day of gains for wheat following sharp losses Monday. CBOT wheat closed near limit down Monday amid spillover pressure from limit-down corn and soybeans.
Kansas City Board of Trade
KCBT wheat ended higher after trading both sides with the other markets. March wheat traded in a range of $5.89 1/2 to $6.07 1/2.
U.S. wheat continues to be uncompetitive on the world export market because prices are too high, traders said. The U.S. has faced tough competition lately from countries the Black Sea region, such as Russia.
Egypt's state-owned General Authority for Supply Commodities, or GASC, said Wednesday it is tendering to buy 55,000-60,000 tons of wheat for shipment Feb. 6-20 on a free-on-board basis. Egypt on Tuesday bought 60,000 tons of Russian wheat in a tender.
Minneapolis Grain Exchange
MGE wheat ended higher as the markets continued to recover from Monday's slide, a trader said. There was a lack of fresh news concerning spring wheat, traded at the MGE, he said.
"If you got some export sales, it's bullish," an analyst said. "Routine business to Japan doesn't count."
Japan said Tuesday it was seeking 157,000 tons of wheat, including 90,000 tons from the U.S., in a tender to be concluded Thursday. The tender shouldn't impact the markets because it is routine, traders said.
March wheat traded in a range of $6.33 to $6.48. That was within Tuesday's range, which spanned from $6.24 1/2 to $6.54 1/4.
-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com
(END) Dow Jones Newswires
Copyright (c) 2009 Dow Jones & Company, Inc.
By Tom Polansek
Of DOW JONES NEWSWIRES
U.S. wheat futures settled higher Wednesday in choppy trading amid worries about the potential for plant damage from a deep freeze in the U.S.
Chicago Board of Trade March wheat futures gained 3 1/2 cents to $5.74 1/4 per bushel. Kansas City Board of Trade March wheat edged up 3 cents to $6.00, and Minneapolis Grain Exchange March wheat added 4 3/4 cents to $6.41 3/4.
The markets seemed to find support from fears that subzero temperatures are threatening winter wheat that does not have adequate snow cover, traders said. Soft red winter wheat in portions of southern Illinois appears to be most at risk for damage from winterkill, which reduces yields, they said.
Still, it's difficult to get too bulled up about the weather because the crop doesn't grow during the winter, an analyst said. Farmers can't determine the full extent of winterkill damage until plants break dormancy in spring.
"In reality, you're not going to get the market to bite off on that until you get into April," an analyst said about winterkill fears.
Trading was thin and choppy for much of the day session, so it's hard to read too much into the activity, a CBOT floor trader said. Commodity funds bought an estimated 1,000 contracts.
CBOT March wheat traded in a range of $5.62 to $5.80 in open outcry trading. CBOT March wheat has support at its 40-day moving average around $5.57 1/2, an analyst said.
The firm close marked the second consecutive day of gains for wheat following sharp losses Monday. CBOT wheat closed near limit down Monday amid spillover pressure from limit-down corn and soybeans.
Kansas City Board of Trade
KCBT wheat ended higher after trading both sides with the other markets. March wheat traded in a range of $5.89 1/2 to $6.07 1/2.
U.S. wheat continues to be uncompetitive on the world export market because prices are too high, traders said. The U.S. has faced tough competition lately from countries the Black Sea region, such as Russia.
Egypt's state-owned General Authority for Supply Commodities, or GASC, said Wednesday it is tendering to buy 55,000-60,000 tons of wheat for shipment Feb. 6-20 on a free-on-board basis. Egypt on Tuesday bought 60,000 tons of Russian wheat in a tender.
Minneapolis Grain Exchange
MGE wheat ended higher as the markets continued to recover from Monday's slide, a trader said. There was a lack of fresh news concerning spring wheat, traded at the MGE, he said.
"If you got some export sales, it's bullish," an analyst said. "Routine business to Japan doesn't count."
Japan said Tuesday it was seeking 157,000 tons of wheat, including 90,000 tons from the U.S., in a tender to be concluded Thursday. The tender shouldn't impact the markets because it is routine, traders said.
March wheat traded in a range of $6.33 to $6.48. That was within Tuesday's range, which spanned from $6.24 1/2 to $6.54 1/4.
-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com
(END) Dow Jones Newswires
Copyright (c) 2009 Dow Jones & Company, Inc.
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