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Another Test of Harvest Lows

Wheat complex disappoints, again.

Another disappointing week for the wheat complex as it followed world prices lower, and then weak corn and soybeans on Friday. Prices once again are testing harvest lows, seemingly comfortable to bump along at these levels than sustain any upward momentum.

Exports sales were the bright spot this week with 615 TMT sold, above the range of estimates and well above the performance of the last few weeks. Worth noting was that, of the 251 TMT spring wheat sold, China bought 120 TMT. We also sold 245 TMT of hard red winter.

Prices responded well to the export sales number with a nice bounce higher. Unfortunately, that was short-lived. Once the Egyptian tender results were reported, prices softened once again. Egypt did buy a good chunk of wheat, 230 TMT and again all from Russia. But prices were slightly lower than last week, at around $213 to 214/MT CIF, indicating that world prices continue to leak lower as they have over the last few weeks.

It’s almost impossible to rally wheat futures if world cash prices are moving lower. That said, with futures hovering near the harvest lows, we do see demand perk up as it has before, and at least offering some support at those important chart levels. So far, the double bottoms are holding in both wheat and corn.

Informa released its all-wheat planting estimate for next year, pegging total acres at 45.9 million, down 200,000 from this year. While most analysts are looking for another decline in plantings, and price levels would support that notion, it is worth mentioning that moisture conditions across much of the central and southern Plains are good enough to encourage an increase in acres. We’ll see who wins – price or water.

In other news, Ukraine reported this week that 90% of its winter plantings are complete. Saskatchewan reported that 98% of its wheat harvest is complete, about 4 percentage points ahead of average. The U.S. attaché to Australia is now estimating its wheat crop at just 20.0 MMT, generally in line with most other analysts, but 1.5 MMT lower than USDA’s recent estimate.

Chart formations look like wheat wants to break down as prices continually hammer at those important lows established in late August. Some of the deferred months have already barely taken out those lows. It would be reasonable to expect that the front months will as well, and that will likely happen early next week to search for whatever stops might be there.

World demand does improve at these prices, so we’ll see if that will be enough to stop the slide this time.

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