2008 wheat acres to jump sharply
Wheat Fundamentals: ending the week on a weaker note may prompt Egypt to be a buyer of US wheat before Monday's opening bell. Last weekend Egypt bought 80 K tonnes of Russian wheat. One week later, hard red winter wheat futures are off 3.8%. the present tender line up has foreign demand of 1.52 million tonnes, not all expected to be derived from the US. Iraq suggest it is studying cash wheat values to see when and how much its new tender will be. Stats Canada released its Sept crop findings and the bottom line is production is down vs a year ago but exports are expected to remain firm and very much needed as the US can not shoulder world demand alone. Australia remains a disaster. Noticeable rains are forecasted but the crop has already completed its reproductive phase and harvest is expected to begin any day. Dry weather developments are just now beginning to appear in the southwest region of the Commonwealth of Independent states. Most at risk are Ukraine (3rd consecutive bad weather), southwest Russia, and the majority of Kazakhstan. The window to plant winter wheat within these aforementioned countries is expected to close in two weeks.
2007-08 Acres: Allendale's wheat/corn price ratio model is suggesting the very real potential for 2008 wheat acres to be in a range of 4 to 6 million more than the 60.6 million planted in 2007. Harvested acres could be in a range of 54.52 to 56.2 million with a 5 year yield ave of 41.7 bushels per acre suggesting wheat production of 2.273 billion to 2.345 billion bu vs 2007 production of 2.114 billion. How could this impact your marketing plans? If you have questions please contact you Allendale Inc Representative 800 551 4626.
2007 Cash Marketing: see Allendale Hedge Advice page, on Tuesday 09/18/07 we sold 50% of the 2007 crop production based on timing suggest this is the first of the year after the harvest is complete with the second opportunity next April-May. Our next target to hedge additional new crop wheat was filled on Friday 09/28/07. See our Hedge Advice page for instructions. The Dec/Mar CBOT wheat spread is 10 cents premium the March. Your cost to store wheat per month is 6.1 cents per bu. The present futures spread suggest it is not economical to store unhedged wheat as the cost is 8.3 cents more than your on farm storage is returning over the three months Dec to March.
Spread Trade: Since the middle of the month of July 2007, the July 2008 KCBT July wheat vs the CBOT has been trading in a range of 10 cent premium the KC to 13 cent premium the CBOT July for the majority of the time. It appears as though the spread has found resistance prem the Kansas City Wheat. Discuss this spread trade idea with you Allendale Representative. 800 551 4626
Trade Position: the fundamental facts are world supplies are challenged by aggressive demand. We are willing buyers technically and fundamentally and have written new entry orders at all three exchanges after reaching our long objectives at the KCBT and CBOT earlier last week.