Harvest is coming down the pipeline, cash prices are low, setting up for a below average crop in yield and quality, what is a guy to do? Well first thing is get the grain out of the fields and into the elevator or bins safely, because right now there’s nothing we can do about yields or quality. The market knows its harvest, and the world is flush with wheat so I don’t see a big rally anytime soon, especially with the U.S. export numbers struggling to even keep up with trade estimates. We continue to be $30-$35 out of the world market, and the cash market will have to correct itself to make it competitive. I have had many producers point to the PNW crop and the news out of the Midwest and ask why our issues are not being reflected in the market. They are right, we are having production issues here and out east, but this time of the year exporters and importers are looking at the worldwide production, and with the US only being 7% of the world’s production and PNW only being 7% of that number it has not put a lot of scare into the market. But we are the largest SWW producing area in the world, and with the weather issues that Australia is having we could see a good strong basis later in the year as importers come looking. That all hinges on if we can get the US export market back in the ball park of being competitive again. So to be a broken record, I am going to suggest being patient, take risk of the table when prices are break-even or profitable, and don’t be hesitant to call Derek or I to ask questions, this is setting up for a tight year and chances of missing the boat are much higher than the past few years. Another market to keep a closer eye this year is the corn, the rally we saw 2 weeks ago was mostly driven by the corn rally and we all know corn is king. Cash price targets-$6.50-$6.80 Chicago Futures Target-$5.70-$6.00
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 futures are currently up 6. Wheat bears are saying, "I told you so" in regard to the recent US Wheat Quality Council Spring Wheat Tour. The tour ended with a HRS wheat average yield potential of just under 50 bushels per acre (49.9 to be exact), which is much better than the 5-year average of around 45 bushels per acre and sets the highest level seen since the tour started keeping track in 1992.