Well it’s about time to put harvest 2015 in the books, one to remember for all the wrong reasons. But there was a crop and with a crop there is marketing to be done. Even though the PNW has had a rough year, with yields down 30% and the extreme heat taking its toll on the quality, the worldwide wheat picture still is painted as a strong year with wheat production. This is pressuring the futures markets down and Chicago seems to be content trading between $4.50 and $5.50, even if there was a futures rally we would not see much of a rally on the cash side as Portland will keep basis in check to remain competitive in the export markets. Export numbers continue lag behind projections and will need to make some big gains to get back on track to help get a stronger bump on the futures side of the market. But the story remains the same as we fight a very strong dollar and large surplus of cheap wheat out of the Black sea/Europe regions. As of right now it looks like if we are to see prices rally a bit it will be on the cash side from Portland. With the strong El Nino becoming an issue with the Australian crop this open the door for PNW exporters to get some of their SWW business, thus the strengthening of the PNW basis. But if this situation was to come to fruition, it would be DEC-MAR time frame as that’s harvest down under. To capitalize on this I would look to lock in a HTA contract on any futures rally between now and November, my interest would be futures price $5.40+. This plan does take some time, and cash flow is delayed, but bills need to be paid so what about near term. There just isn’t any news in the wheat market to be really positive about, we are trending lower with the occasional rally here and there. When this happens the wheat market becomes more of a follower of the corn market, and with record numbers being thrown around that does not help our cause. As of right now for cash flow I am looking to sell what I have to, $5.90+. I am just struggling with thinking that even if we get a substantial rally from Chicago that Portland would be willing be the basis strength were its at considering how far we are out of the world export market. Now this could all change at a flip of hat, but from the picture being painted in from of me, there’s not a lot of sunshine. On a side note, with next year’s prices being projected the same or worse I would strongly recommend looking to lock in some HTA contracts on any large futures rally to hope fully take some of risk of the table.
P.S. Something to keep an eye on, with the stock market taking a few big hits the past couple days, word on the street is equities are starting to buy up cheap commodities which could give us a quick Chicago rally, we will have to see if this materialize.
Cash price targets-$5.90-$6.50 2015 Chicago Futures Target-$5.40+ 2016 Chicago Futures Targat-$5.70+
UPDATE 7/1/2015 With the rally continuing yesterday I went ahead with another cash trade of 10,000BU @ 6.85. I also initated a HTA contract for 10,000BU, I locked in the futures @ 6.14 and with a basis of +.65 I am bullish the basis at least .30 by harvest. Full report and market thoughts sent for tommorow. You can see the detailed marketed breakdown on the Co-Ag Farm JV link on the left.
Update 6/29/2015 Withh the rally we had last week and this morning, I have went ahead and priced some NC bushels for August delivery. I made a trade on 6/25/2015 for 5,000BU @ 6.55 and then I pulled the trigger for 20,000BU @ 6.73. This puts me at 30% sold for 2015 crop with a average price at 6.795. With .40 over my break even I feel very confident with the past 2 trades and how the future outlook is heading. I will have a more detailed report later this week after the USDA releases there weekly numbers.
Take a look at the Co-Ag Farms J.V. Link to find out more.
Chicago wheat is up 4 this morning. Wheat bulls are talking about the dry conditions across a large portion of southern Russia and parts of Ukraine, while the bears are talking about a truce between Ukrainian government forces and pro-Russian separatists. Technicians continue to point towards an extremely weak formation of lower highs and lower lows.
Pea & Lentil bids : All prices are now basis 2015 crop. New crop offers are being accepted and encouraged