Woo! What a week, all of this weather the Midwest, east, and PNW has been receiving finally caught up with the trade. With last week’s rallies to a cash of 6.55 to another big jump to 6.85 before the reports this week was an excellent time to take some risk off the table. As posted earlier in the week I went ahead a few trades for the Co-Ag JV farm and now have 50% of my crop sold or hedged, a little later than I was hoping for but with the level s we have been at the past couple months I am not complaining. Right now with 50% marketed I am averaging 6.80, which is a good amount over my break even and gives me more flexibility in marketing the rest of my crop. I did go ahead and initiate a HTA contract when futures reached $6.14 SEP, with a basis of +.65. With HTA’s you lock in your futures price, the 6.14 and want the basis to get stronger, in this trade anything over +.65. If my prediction is correct, and futures fall off and the basis rallies to let’s say +1.00 I would have made .35 cents. What does this equal in the cash side? 6.14+.65=6.79 cash, with 6.14+1.00=7.14 cash. But I did not make this decision on gut instinct, I looked at the market, decided what was causing this rally and made a decision based on those facts. What I saw was a wheat market that was being driven up by corn, weather, and speculators trading getting out of short positions. The report this week was actually bearish to neutral for wheat, even though all the weather and quality concerns in the US they kept the numbers that same. So what this told me was this was not going to be a extended rally and I needed to take advantage of some good prices while I could. So I locked in the futures price, expecting futures to fall and when futures fall basis will strengthen and I will be able to capture a higher cash price. Now since I did this HTA for NC I don’t have a lot of time to play with the basis, and with these weekly crop reports that could change the market landscape so I will have to watch the market hard and I plan to pull the trigger if I get .15-.20 profit.
The Co-Ag Pre-Harvest meetings are July 7th and 8th, please attend if you can as important information on delivery locations and commodities is provided as well as great time to ask questions or concerns. Randy Fortenberry will also be in attendance to dicuss the upcoming marketing year and what to look for.
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.
Wheat futures are currently down 3. Wheat takes a few steps backwards from it's most recent highs. There's a bit more moisture in the forecast for parts of Canada, while the harvest in the U.S., especially the HRW harvest may gain a bit more momentum over the weekend.