Consider selling cash wheat
Wheat Fundamentals: The Wheat Quality Council tour of spring wheat suggests yields are fine at 37.3 versus a five year average tour estimate of 35.1 bushels per acre. The trade is instead looking at problems with world production and the continued purchases of US wheat still continuing. Thursday's sales report indicated last week was the biggest one week buy in over 10 years. Friday, Iraq jumped in with 200,000 and South Korea and Taiwan added small purchases to the mix.
Weekly Export Sales: Excluding last week's sales number, the first six week's of this new marketing year saw wheat sales 52% higher than last year. With last week's sales included they are now a large 79% higher. We will certainly agree this pace won't last forever. However, it is clear to say USDA's 2007/08 export figure of 1.050 billion bushels is too small of an increase over last year's 910 million figure.
The Technical: Trend is up, breaking up and out of its recent trade range of 6500 to 6000. Key immediate support is 6320. A breach of the levels is expected to push Sept futures back down to the 6200 and then potentially 6000. Overhead resistance is derived from the monthly charts and suggest 6900 from May of 1996. If penetrated then we need to prepare for a move to 7170 made April of 1996.
Marketings: For cash marketings, typically the Oct-Nov time frame is when cash wheat prices peak. We recommended to sell into the cash market in the October time frame. However, do not ignore present firm cash prices for wheat to sell into. Call your Allendale Representative for your specific cash marketing needs.
New Crop 2008: The July 2008 CBOT wheat futures are locked in a range of 5600 to 5900. There is plenty of bullish enthusiasm for world wheat and we are on the upper end of the trade range. We recommended to hedge a minimum of 15% of new crop 2008 wheat futures against anticipated production Wednesday morning and were filled at 5760.
Trade Position: Though wheat may be getting a bit overvalued we cannot stand in front of this market will straight sales. Instead we would sell only on a stop (when prices push lower and break support). The long term trend remains very much up. As long as continued strong demand rides higher with world production problems, the weight of the spring harvest is expected to be kept to a minimum.
Corn Fundamentals: So far, these extended forecasts of hotter and drier conditions forecasters have posted in the past two weeks have not turned up. They were trying it again as of this morning. The trade has become skeptical of these forecasts and now would like to be shown the actual weather before getting excited.
Weekly Export Sales: As noted last night corn sales, so far, will not meet USDA's expectation. There is a little more active booking of new crop corn going on though.
The Technical: trend for Sept corn futures is down but potentially developing a near term bottom. Key immediate support is 3064 with resistance of 3374. Please note the very small upward trend for Dec corn futures which began on 7/23.