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Wheat Market Is Under Even More Pressure, Analyst Says

Weather premium doesn’t seem to be a concern, analyst says.

An early week rally into Tuesday buckled and wheat headed lower again, getting another bearish boost from Friday’s stocks and plantings report. Wheat prices continue to flounder with large stocks, good growing conditions across the Northern Hemisphere and aggressive export competition.

As for the reports, both wheat and corn markets were caught off guard. Wheat plantings came in at 45.754 million acres, the lowest since records began in 1919, and much less than the 47.0 million acre estimate. If realized, all wheat plantings would be 4% below last year’s 47.8 million acres.

All winter wheat plantings were increased about 200,000 from the January estimate to 31.5 million.

Hard red winter was increased 200,000 to 22.4 million; soft red decreased 110,000 to 5.55 million; and white wheat increased 110,000 to 3.55 million.

Other spring wheat was estimated at 12.8 million acres, at the low end of estimates from 12.6 – 13.9 million and less than last year’s 13.2 million. Hard red spring wheat was pegged at 12.4 million. Durum was pegged at 1.42 million, down a whopping 31% from last year.

Corn plantings were estimated at 92.8 million acres, above the 91.33 million estimate and much above last year’s 89.129 million. Soybean plantings were pegged 84.6 million, below the 86.17 estimate, and much below last year’s 89.2 million.

Clearly, at this point, the corn and bean plantings are far from final. With massive flooding across major corn and bean country of the eastern central plains and western Midwest, the shift in acres could be huge, as could prevent plant.

The stocks report was also bearish, with wheat stocks on March 1 pegged at 1.591 billion bushels, 31 million over the average estimate. Corn stocks were 8.604 billion bushels, much above the 8.34 billion bushel estimate. Soybean stocks were 2.715 billion bushels, 35 million more than the average trade estimate.

Export sales of 511 TMT were within trade estimates. Hard red winter made up 58% at 295 TMT. Total sales to date this marketing year are running ahead of last year, but world competition has picked up over the last two months, keeping pressure on overall price.

The U.S. won some business to the key market of Egypt this week, with a 120,000 MT sale of soft red winter. It was the only wheat Egypt bought in this tender, which could be their last for awhile as they start their domestic procurement program.

Another week of bearish pressure keeps wheat on the defensive, with virtually no weather premium built into prices. At this point, with crop conditions ratings showing better than last year, there doesn’t seem to be much concern about weather premium. It is very early in the growing season, but so far there aren’t any major trouble spots showing up across the Northern Hemisphere.

Hedge funds are carrying a major short position and have had good success defending that position.

Unless we get a production concern, it would look like wheat will continue to run into significant selling on rallies.


Louise Gartner, Owner, Spectrum Commodities

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