The wheat price posted its high for the week on Monday and then selling took control and stayed into the close on Friday. New contract lows established as the U. S. dollar rallied. Even Friday when the dollar sold off, the wheat market failed to rally. The wheat has established a habit of lower prices and a bad habit is hard to break.

Traders see the fundamentals as bearish as the supply shows a high number and the demand is steady at best. Wheat importers know the world supply of wheat is large and they have no need to build inventory. Figures this week showed our wheat price, 30 cents per bushel above the competition. Despite our higher wheat price, the weekly sales report listed 519,000 metric tons of wheat sold for two crop years. This was slightly above the high end of the range of estimates. Traditional buyers such as Nigeria, Indonesia, Japan and South Korea topped the list of seventeen countries. The wheat market needs to see the names of Egypt and Iraq to excite the bullish traders.

The USDA will release updated grain reports at the end of the month. Wheat traders will watch for the Spring Wheat acreage and the quarterly grain stock numbers. The average acreage estimate for Spring Wheat is 13.43 million acres. This would be a slight increase over last year. The average estimate of quarterly wheat stocks is 1.366 billion bushels. This would be 326 million bushels above last year’s number. As you can see, the pile of wheat is getting taller.

The question by producers is what should I do? The answer, be prepared to sell rallies. Looking at a normal seasonal chart, spring rallies do occur in the wheat market. With the burdensome supply, do not expect a large gain in price. Once you have reached your confront level with cash forward priced contracts, extend your protection with put options using the September Kansas City wheat contract.
 
Tom Leffler
Leffler Commodities, LLC
2901 Lakeshore Drive
Augusta, KS 67010
866-468-6866

Larry Glenn
Frontier Ag
Quinter, KS
785-754-3348
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