Wheat Futures: Which Direction?

Wheat futures have been riding high over the last four weeks, but that seems about to end, even though weather conditions in Canada and Russia continue to cause problems for the grain.

The challenge for wheat, as it has been for years, is the increasing amount of acreage around the world being dedicated to growing the grain.

With that in mind, the inevitable bad weather in various parts of the world, while having a temporary impact on wheat futures' prices, overall level off and bring them back down to where they belong.

Until there is a move toward planting less wheat, which is unlikely any time soon, this will remain the way things are.

Heading into August, wheat futures will drop down to about $5 a bushel, or even lower.

Toxins Cutting into Wheat Income in Ohio

Higher than normal level of toxins are slashing the income of some farmers in Ohio.

According to representatives of the Ohio State University Extension Service, vomitoxin levels are the worst in seven to ten years in some areas of the state, especially areas where it's cooler and wet.

A wet May in particular produced conditions for the fungus to thrive.

The high levels of toxins limit the use of wheat for people, and also in livestock, especially pigs, which could cause a lot of problems in them.

Kansas Wheat Harvest Slows on Rain

Rain in Kansas has slowed down the wheat harvest, as just after it got started things had to be temporarily shut down.

Estimates are farmers will have to wait until the weekend before resuming harvest, which was very spotty across the state.

The largest amount of wheat harvest I heard of was in the Kiowa area, which was able to complete 232,000 bushels last weekend before the rains came.

About 12,000 bushels were completed near Arkansas City before several inches of rain shut that down as well.

Winter Wheat Production Down 3.7 Percent

With farmers planting 13 percent less acreage of wheat this year, the winter wheat production is projected to fall 3.7 percent, according to Informa Economics.

This year will bring in approximately 1.466 billion bushels of wheat, in comparison to the 1.523 billion bushels last year.

Yields should rise to about 46 bushels an acre from the 44.2 bushels an acres produced in 2009.

Harvests are up a little from estimates because of the increased bushels an acre. Spring and winter wheat should drop from 2.216 billion bushels in 2009 to 2.079 billion bushels this year, an increase from the 2.04 billion bushels estimated to come in.

Hard red winter wheat will rise over last year, bringing 964 million bushels, a gain from the 919 million produced last year.

Soft red winter wheat on the other hand will drop significantly from the 404 million bushels last year to 295 million bushels in 2010.

Wheat Outlook Dismal on Supplies

Wheat Inventory High

Stockpiles of wheat are leaving the industry reeling even more, as the largest inventory in over 20 years is emerging from the heavy wheat harvest.

Projections are there will be close to 1 billion bushels of wheat in the warehouses and bins when the harvest comes in; 20 million bushels beyond the estimates of the USDA.

The already low prices will drop even lower, as farmers continue to plant the grain based on prices from several years ago, rather than prevailing market conditions.

This is expected to finally correct the over-planting of wheat as farmers look to other areas to generate profits, as wheat hasn't been doing it for a few years.

The reasons for wheat being so abundant is lower exports as many countries are planting wheat and getting good results, and American consumers aren't consuming as much, driving domestic demand down. That and just too much wheat being planted is the issue driving the huge wheat inventory.

Wheat Inventory High

Montana Winter Wheat Harvest Starts

Montana Winter Wheat Harvest

Reports are the winter wheat harvest in Montana has started, according to the Montana Crop Weather Report issued Monday at the Montana Field Office of the National Agricultural Statistics Service.

Approximately 4 percent of the state's winter wheat harvest is complete, in contrast to 2 percent during the same time period last year. This is far behind the five-year winter wheat harvest average in Montana, which usually stands at 25 percent at this time.

So far farmers are rating the Montana winter wheat crop at 41 percent good and only 36 percent fair.

Close to 30 percent of the Montana spring wheat crop is turning according to the report, in comparison to 46 percent last years at the same time. That is faring a little better, with farmers rating the spring wheat crop at 47 percent good, while 31 percent is rated as fair.

The conditons of range and pasture feed are down about five percent from last year, with 39 percent being rated as good, a decline from 44 percent last year during the same period.

Dry conditions have causes pastures to dry up.

Montana Winter Wheat Harvest

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.

Wheat Harvest Already Breaks Record

Even though South Africa, Australia and Argentina haven't harvested their wheat yet, current wheat harvests around the world have already broken a global record.

Over the last three years worldwide consumption has been 22.9, 22.7, and 22.7 billion bushels. So far this year 23.3 billion bushels have been harvested.

If consumption is similar to the past years, we'll see ending stocks increase by about 900 million bushels.

Projections for wheat use in 2008-2009 are at close to 24.1 billion bushels. After South Africa, Australia and Argentina harvest their wheat, supply is expected to come in at around 25 billion bushels.

With farmers belatedly planting more wheat because of past performance, it has caused this surge of supply. Now with prices falling because of so much product, wheat production costs are higher than what wheat prices can bring.

Many wheat farmers need to understand that when a great year just ends, it probably is a signal that the next year will end up just like this one, as the obvious knee jerk reaction of planting more acres will happen, which will drive down prices.

Those investing in wheat also need to take this into account.

Where is Wheat Price Per Bushel Going in 2009

Wheat ending stocks for 2008-2009 are slightly higher than trade estimates of 594 million-bushel-average, as well as the 601 million-bushel average the USDA projected for October.

The overall global wheat production has risen, while some individual countries fluctuate. Argentina for example announced its production fell by 1 million metric tons to 11 million, while India has had such a good wheat harvest this year they're making two million tons of available for export.

Wheat supplies will also put competitive pressure on corn because of the large supply this year.

Because of the huge supply, there won't be much happening with wheat that will surprise anyone.

As far as prices, soft red winter wheat has "the most downside room; some of better classes can hold in a bit more strongly."

The global wheat market will continue to be bearish, even as drought conditions pressure certain countries like the Phillipines, Argentina and most recently China. Even with that pressure, the price for wheat per bushel in 2009 shouldn't be affected too much, and it shouldn't be counted on to push up wheat prices a bushel anytime soon.

There will be plenty of wheat for sale, and that will keep wheat prices per barrel down, as the huge wheat surplus this year, especially in the European Union and Black Sea region being major contributing factors. There has also been a huge wheat crop in Canada this year to add to the overall wheat picture.

Considering India wheat being so prolific this year as well, and you see how wheat prices per barrel in 2009 will struggle to rise, even when you take into account quality wheat. In these types of economic downturns, survival is more important than the protein content of wheat, and being able to afford the cost of food in general, and wheat in particular is the guiding factor behind where prices of wheat per barrel will lead to.

It's hard to tell how much wheat will be planted in 2009 as well, with fertilizer costs playing a big factor in the decision of whether to plant, and if wheat is planted, how much fertilizer can be used for the wheat and still be cost effective. Fertilizer prices have gone down some, but low wheat prices per barrel make it difficult to top dress wheat with nitrogen fertilizer and still be profitable in a meaningful way for those putting their wheat up for sale.

The most recent projections for wheat exports from the USDA stand at 210 million bushels, an extraordinary third less than 2008. And as of January 1, wheat sales have plunged by close to 40 percent, with only 158 million bushels sold in the U.S.

While there is some opportunity for wheat exports and wheat prices per barrel to rise in 2009, it will depend mostly on weather conditions for the U.S. wheat crop, along with the number of acres planted after a fairly poor year. The high protein sector may offer some opportunity for U.S. farmers, but wheat quality from other countries, and the above-mentioned factors will determine the price per bushel of wheat in 2009. There's no way of knowing at this time where all this will head, as weather is the key factor, and that of course has yet to be played out. Other countries have suffered quality wheat production, which could help wheat prices per bushel rise, but that will highly depend on the quality of wheat produced in the U.S., which again, will be determined by the weather conditions in the spring months of 2009.

Wheat Drops to Lowest Level in Three Weeks

The price of wheat in the U.S. fell to its lowest level in three weeks as traders aren't optimistic about the comming Department of Agriculture report on export sales data.

Expectations are the global crop will dampen the demand for American wheat, as production has increased in emerging countries.

Wheat that was inspected for export from the U.S. came in at about 13.2 million bushels for the week ending October 30, a drop of about 40 percent from the week ending October 23.

India is especially making an impact on exports this year, as it announced it will probably make about 2 million tons available on the export market. India could end up with a record wheat crop this year of 78.5 million tons.

Worldwide wheat production through June 30 is projected to leap by 12 percent to a record 683 million metric tons. That's the equivalent of about 25.1 billion bushels.

Wheat for December delivery dropped to $5.372 a bushel today on the Chicago Board of Trade.

Good Condition of U.S. Winter Wheat Crop Causes Prices to Drop

The U.S. Department of Agriculture report was so good for wheat, that it has exceeded last year's condition by a whopping 55 percent for the same time frame.

As of October 26, 65 percent of winter wheat was in either good or excellent condition said the USDA report.

With the plethora of wheat available, wheat futures dropped 15.5 cents to $5.14 a bushel on the Chicago Board of Trade.

Much of this abundance came because farmers saw the amazing price of $13.495 a bushel on February 27, and so planted far too much, thinking it would profit them. Unfortunately, they never seem to learn that once the price has elevated to such levels, there was no way it could continue on because of the obvious surge in planting, which would ultimately drive the prices down, as supply increased. That, of course, is what has happened.

Another key factor has been the abundance of rain, which along with the huge sowing, has produced a huge crop.

Global wheat harvests could increase by 11 percent to reach a record of 680.2 million tons. It's also estimated that stockpiles around the world could grow by 21 percent to 144.4 million tons, according to the USDA.

Wheat Crop 62 Percent in, Compared to 67 Percent Last Year

The winter wheat harvest has fallen behind last years pace, as the USDA reports as of Sunday, only 62 percent is in the bins, while last year at the same time 67 percent had been stored.

It is also significantly below the 5-year average of 70 percent. The good news is it did increase by 10 percent over last week.