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U.S. wheat price competitive?

Wheat started off on a bullish note with exports coming in at 657,000 tonnes (635,500 old crop + 22,000 new). This was better than trade’s high end expectations of 400,000. A low volume session kept all news to a small range trade for the day. There was more talk that Ukraine has reached the end of its expected exports. That did offer another short round of buying as well. It will likely take the higher volume trade next week to see any real reaction to the day’s bullish news. 

What the morning exports did show is that the talk about US wheat once again being competitive in the world market might in fact be coming true. Bulls in this market have to be a little discouraged, however, since the lowering of the wheat ratings to an all-time low, combined with a pickup in exports, has failed to result in much of a bounce from chart support levels. At current levels even bargain buyers should have some interest in buying this market. Looking back on the charts we see wheat having the calmest seven trading day stretch in a very long time. US wheat news is winding down but traders might be more interested in what the next move will be for the other grains before either side gets very active with trading.

Seasonals to Christmas: There is not a clear pattern to expect over the next month. Of interest, though the results of the past 15 years are mixed, six of the past seven years saw gains…Rich Nelson


Working Trade

(10/24) Sold Jan 900 call/sold Jan 900 put as a straddle for 72, risk to 86, objective 25.

(11/20) Buy Chicago July 848, Risk 833, Objective 878. 

This week’s action was “all-bull” so to speak. The February futures contract rallied a little more than $2.50 for the week. This excitement was mainly due to the strong cash cattle action at $128. It is clear the market feels there will be an agreement made on the Fiscal Cliff talks in the coming weeks and that the US consumer will not be socked with heavy taxes. We continue to strongly advise traders not to stand in front of this cattle market with sell orders. On a seasonal basis this market rallies until mid-March. As a reminder our price targets for futures have been $128 for December, $134 for February, and $138 for April…Rich Nelson


Working Trade:

(10/30) Bought February cattle 129.35/sold December hogs 77.92 for a net price of 51.42, risk to 48.17, objective at 57.92. Closed 50.25.


Written by Rich Nelson 

Chief Strategist 

Allendale Inc. 

4506 Prime Parkway 

McHenry, IL 60050 


This material has been prepared by a sales or trading employee or agent of Allendale Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Allendale Inc.’s Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Allendale Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. 

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