Updates Archived From December 28, 2023 to Present.

For Additional Achives back to November 10, 2023, Click <Here>

MarketBullets® Pre-Dawn Monday, Dec 30 2024

     US weekly net sales of wheat for the week just ended 12-19 were 612,400 tonnes, a 34%  rise from the previous week and 64% above the 4-week average.

     Brazil is seeing increased estimates for December total wheat shipments.  

     Buenos Aires Grain Exchange (BAGE) estimates Argentine wheat at 64% harvested and 86% “normal to excellent” condition versus 58% this time last year.

     The markets are still in semi-holiday mode for the second short-ended week. Christmas week produced a net gain of 13½ cents in nearby Chicago Soft Red Winter (SRW) wheat futures, closing at its highest since December 16. KC Hard Red Winter (HRW) futures were up  10 for the week and Minneapolis Hard Red Spring (HRS) gained 5½. Paris Milling Wheat jumped the equivalent of 16½ cents per bushel.

     Very early Monday, Chicago was up 2¼-cents, about 20 cents above its recent December 4 lows. The 61-session trend channel is still negative-sloped. The last trading week of 2024 will reveal if the market can gather sufficient buying energy to push above the top end of the range. Final cash sales for the calendar year for tax purposes may provide a weight on prices, but they will have to be on the books by early Tuesday.   

     Wheat futures trade will close early on Tuesday, December 31 at 10 AM Pacific Time and will re-open on Thursday, January 2nd for regular hours.       

     The trend is still not healthy, as the charts still shows a pattern of lower highs and lower lows. A closing break above $5.69 would be a clear warning of upward forces in Chicago SRW, while a closing low below $5.29 would create a hole in the bottom allowing technical expectations of still lower movement. This environment is a “marketing plan delight”, with incremental sales of both old and new crop on a “go-ahead” basis. The downside risk is lower than it was a month ago, so many producers are likely to defer sales into the new year. It’s hard to fault this idea.

     There is little drama on the news wires, as the trade seems likely to remain muted until next Monday, January 6.

Stay tuned. Happy New Year.      

MarketBullets® Friday Dec 27, 2024: Pre-Dawn  

     Algeria completed a 1.1 million metric tonne milling wheat purchase on Christmas week in an international tender, sourcing from multiple vendors, mostly to be shipped from February thru March. Even though no U.S. origin wheat was involved, this kind of hefty buy gave the whole wheat complex some lift.

     This time of year, wheat is often sensitive to corn and soybeans as a market lead. Both corn and beans have come up off of long-term lows. Beans had been struggling until China stepped in and bought a few loads in spite of cheaper beans from Brazil. Corn has been in an uptrend since 4-year lows printed in August.

     Given the absence of global political or military drama, wheat trade volume is likely to remain slow in low volume until Jan 2. Money funds have mostly completed their year-end adjustments and the charts are not scaring them into any box-canyons. 

     The wheat price trend is sideways in a narrow range. The boundaries are well observed by the trade, so any breakout from the range is likely to trigger some trading energy in either direction.

We can track this market. Stay tuned.   

MarketBullets® Tuesday Dec 24, 2024: AM  

     Short hours Tuesday; futures close at 10:00 AM Pacific / Noon Central. Christmas Day Wednesday: no markets, then trade resumes at 6:30 AM on Thursday for a regular day session. Friday markets: open, regular hours. The volume is likely to be low this week, but that does not mean the market cannot move, only that most trade desks are short-staffed. Usually it is a quiet week.

     Chicago wheat was trading in its comfort zone Early Tuesday, a price zone about 15 cents deep that has held since last Thursday, Dec 19.

     Yesterday SDA reported net weekly U.S. wheat export loading inspections for last week of 403,719 metric tonnes, 34% over the previous week. Year-to-date shipping is 27% over the same period last year.

     Private estimates for the new year Russian wheat crop from Sovecon continue to portray a much reduced volume of exports, with a 17% drop from this year’s total, down to 36.4 million metric tonnes. It is still a long way to the new crop harvest from now.

     Slowing Russian wheat exports and a short production year forecast are the largest positive market influences at the moment.  

     The wheat complex is displaying a low-energy, “dragging bottom” pattern and tone. The funds have continued to add to their short-sold positions, even though there has been almost no profits from the move so far. It seems that there is no sight or smell of large predatory wheat buying factors lurking. With a relatively large position that has been added in a narrow range of prices, the speculative group is somewhat vulnerable. There is no corresponding potential rush-to-sell factor, so the current lows become a key backstop for marketing decisions. If the latest series of lows fail for any reason, it will still trigger selling energy.

     The emerging year has the potential to be very volatile, as threatened tariff impacts may come and go. With such a large proportion of the global expectation for wheat supply coming from a single producer (Russia), the possibility of a weather-related market shift is expanded, but political economics promise to be the less predictable large factor. It will require attention to the markets to execute a decent marketing plan.

Stay tuned.

MarketBullets® Monday Dec 23, 2024: AM  

     The next two weeks are holiday shortened, leaving the rookies running many trade desks. They have resources, including some food, some directives and house-keeping chores, but in general it is a quiet period. No serious trading decisions are likely to be applied unless there are headlines. The Boss has given the desk his personal phone number with strict instructions not to call unless the market or the office is on fire.

     Pressure to sell cash grain is just a tid lower, since Congress passed a bill Saturday morning that funds the government through March 14, including coverage for Farm Bill operations for a year.

     The early Monday wheat trade is slightly positive, with Chicago and KC up 6-7 cents, Hard Red Spring up 4½, and Paris up €3.75/Metric tonne (about $.11 per bushel). The pattern is sideways near key lows, following the same path since September.

     In order to prevent attraction of short-term technical selling attention, Chicago has to stay above $5.28 in the March contract, about a dime above current trade. If that tripwire is activated, the next lower support is around $5.14, a more serious break, since that low dates back to August of 2020 and below which there is plenty of technical room for more declines. The market is weak, and has no mandates to honor.

    Russian wheat exports are slowing, this week at 470,000 metric tonnes, about half of last week’s total. They have set their 2nd half of marketing year quota at 10.6 million tonnes, about 62% less than last year’s 2nd half limits.   

     Ukraine is apparently jumping to fill export slots that Russia might have filled with a 90% surge over the previous week’s general grain shipments for a y-t-d gain of 26%.   

     Word on the street has China’s Sinograin in the last week has purchasing 500,000 metric tonnes of U.S. soybeans for March-April shipment, following 750,000 tonnes last week, Brazilian beans are known to be less expensive. Hopefully they will not run another buying surge ultimately to be cancelled like they did with the 1.1 million-ton Soft Red Winter (SRW) wheat buy a year ago. Could it be that they are signaling Trump? Let the games begin!

     The Coceral yesterday estimated 2025 E.U. (including the U.K.) soft wheat production at 140.4 MMT, up from 125.5 MMT in 2024.

      We have become accustomed to the wheat prices in a sideways range since last September. The hazard here is becoming complacent and in-attentive, but it does seem like a good time to rest and ponder the big picture.

 Stay tuned.   

MarketBullets® Friday Dec 20, 2024: Pre-Dawn  

     French Farm Agency “AgriMer” has released an estimate of total domestic wheat exports below 10 million metric tonnes, 41.3 million tonnes below last year.

     New Chicago March Life-of-Contract (LOC) low on Thursday. On the continuous front month charts, Thursday’s low matched the November 14 low made by the now-expired December contract. The next (and last) lower target range is $5.14 - $5.19. After that there is nothing to call “supportive” until we go all the way back to late August of 2020, effectively erasing all of the “Russian Rally” created by a drought-damaged crop and a Russian invasion of Ukraine.   

     Rising interest rates: the 2-Year  Treasury Note contract is at its highest nominal interest rate since late July ’24. The 30-Year T-Bond is inches away from its highest close of the last thirty-two (32) years, helping to push the U.S. Dollar Index into its highest value since November of 2022. Think cost of storage, borrowing rates, national debt, expensive wheat…

     Copper approaching a key previous supportive price zone that has been uncovering increasing buying since at least July 2022 (2.4 years).

     Home Depot stock applied as a canary is pulling back, now about 3.8% below its highs printed just 4 weeks ago.

     It is already well-known that the Russian winter wheat crop has entered the winter in tough shape. It is also well-known that wheat is a tough grass plant and the crop is made in the spring, but tolerance for a dry spring is very limited. The Russian publication “Prozerno” put out a fairly hyperbolic warning in the first week of December:  “So, in Russia as a whole (excluding new regions) winter crops in good condition are only 5.48 million hectares, this is the smallest amount of good crops before entering winter in the last 23 years!!! Another alarming fact is that in the Central Federal District the share of bad and unsprouted crops is 62.2% or 2.07 million hectares, the situation is also bad in the Southern Federal District - 44% bad (3.07 million hectares), the North Caucasus Federal District - 29.2% (0.7 million hectares) and in the Volga Federal District - 14.1% (0.62 million hectares). At the same time, if in the southern regions of the Southern Federal District and the North Caucasus Federal District it is possible to improve the condition during the winter, then in the Central Federal District and the Volga Federal District it is extremely difficult, practically impossible, only if a comfortable spring allows winter crops to somehow recover... And the condition of winter crops is very bad in the new regions, but there, as in the South of Russia, an improvement can occur. The cause of the troubles is largely the summer-autumn drought of 2024. We will discuss this topic in detail at the Mountain Grain Assembly 2025 on  February 4-7, 2025.”

     The Russians are skilled at influencing the market price through publications, but the tone of the above article seems authentic, as though a bureaucrat is trying to get the head office to realize there is trouble brewing…

     Add together a strong U.S. Dollar, a rising U.S. interest rate (despite a Fed cut of .25% this week), lower gold, a lower stock market, coming firmly off of record highs, and it seems there is a messy change in the wind. This may be due to feverish political maneuvering in the U.S. over the public debt-limit games and fears of economic violence being stoked by those same game players, or that Putin is displaying his implacable and unchanged objectives…or maybe its just a bit of cycle-sickness. There is no mandate for a big change in wheat price behavior, but lots of speculation about what will come next spring. There is no real point to debating the condition of dormant or at least very sleepy winter wheat. Uncertain markets are often negative markets, as speculative money won’t buy and cash sellers won’t sell. SO…stay on plan, relentlessly make the incremental sales on schedule.

     The wheat price complex has moved down to lows that are challenging the long-term pattern. There is absolutely no meaningful buy signal at present, but there is a powerful impulse to hold onto wheat in the bin. That alone suggests that it’s probably a good time to let go of a sliver of wheat. Bear in mind that if you, having made some sales, dread feeling later that you might have missed the price-bus north, you can buy call options. Just don’t wait too long if the market has already begun to change direction. Have a plan for that, too. Call your merchant and do a little advance planning.

  The stuff is really trackable. Trust the track!  

MarketBullets® Wednesday Dec 18, 2024: Pre-Dawn  

     The “Aayy-Eye” is coming, encompassing all data, covering all possibilities and all risks, self-adjusting and self-improving. It is that for which all decisions become a mere ladder to the sky, possessing a power not “of the flesh”, but “over flesh”*, seductive and immovable in its correctness, implacable in its crushing of the old ways of navigating or managing. There is no-one who has not considered that he or she might be replaceable by an automaton, a golem that does not rest and only grows stronger as problems are encountered and solved.

     Traders have dreamed of finding or creating automated trading systems for many decades, since the first personal computer. I can recall using LOTUS 1-2-3 spreadsheets and a Commodore 64 to calculate moving averages in the mid-1980’s using a “massive” 10 megabyte external hard drive. It was like suddenly having a flashlight in the woods at night; we thought we had struck gold. Ever since that period I have watched as many thousands of dollars and many thousands of hours were poured into “systems’, each one intended to be “the one” that diverted some of the river of money flowing through the world into our pockets. There was always a better one. They worked, some astonishingly well…until they didn’t. It seemed that the rainbow pot-o-gold was always just ahead, but for most of us it was a will-o th’ wisp, leading on and on, but never arriving. Somewhere there must be a “Holy Grail” of futures trading; a “system’ that is always profitable, self-adjusting…right?

     Now it seems like the “Artificial Intelligence” in the news every day is just the latest and most interesting traders’ toy, one most likely to produce the “final solution”, but I have an intuitive perception that says, “no, there will never be the perfect traders program.” The basis for this hunch is that the market is a living creature with a will and intelligence of its own, and a survival drive that will foil any mechanical device, even one driven by a rocket powered intelligence. The perfect trading system would destroy the market. Either one person has it, which creates an impossible rate of return leading eventually to possessing all the money in the world. Or everyone has it, in which case we are back to the good old competitive trading world, where no one entity can dominate for long, as it really is not possible to know the future. The casino will escort anyone out the door who wins too much or too often. It’s a business killer, so “no, there is no sustainable perfect system.”  The AI will never catch a fish on a fly, right? Well...maybe, but you get the drift. Life and the living markets will adapt.

     Since we have disposed of the threat of the AI, what can be drawn here? It becomes clear that a detached, arm’s length perspective on the wheat market can be achieved without a supercomputer. That detecting a trend and either riding it like a surfer on a wave or avoiding getting run over by it is not just possible, but that we have been doing that for a long time, not just in the market, but in our lives. The objective for wheaties is being to take advantage of the natural market environment by being observant and thoughtful, staying out of trouble and capturing the trend when we can see it. We may use the AI for certain jobs, but it is not necessary and not appropriate to surrender out fate to it.  

     Wheat producers are inherently long all the time. The only questions are when and how much to sell. As long as the gobbermint protects the market to keep it operating freely, we have just one trading job, which is to sell efficiently. We can do this by tracking the trend, accelerating sales when the trend is against us and slowing sales when the trend is in our favor, with the objective of optimizing our marketing. We won’t always know what the trend is, but we will know enough to increase profitability by a percentage large enough to justify the effort. Every once in a while, we will dodge a big problem and every so often, we will capture a larger than normal bite of the pie. It’s the average per year that will keep us healthy. Its trackable. Let’s track it!

     The wheat market is in a “fair value” valley. There is enough wheat moving to take care of the world’s demands at the current price. The buyers are meeting the sellers. This is not a permanent balance. It will be changing soon.

     Winter wheat crops are in generally good condition for the dormancy season in the northern hemisphere, with the exception of a fairly wide sector of Russia. Wheat crops being made in the spring, there will be no decisive data for at least another 60-90 days.

     There is some percentage chance of a wide spring moisture problem for the Russians that could be a major factor for higher prices ahead. The private analyst “SovEcon” estimates recently that the 2025 Russian wheat crop will see 78.7 million metric tonnes, which is 3 million tonnes lower than their previous estimate, and below the USDA’s current 82 million tonne guess.

     The southern hemisphere total wheat crop is just 10% of the global production, making the seasonal swing a key to market price analysis. Even if the Aussies and the newly revitalized Argentinians are very aggressive, they can only have so much impact, even when as now they are also in good shape.

     The U.S. wheat price trend is weak, sideways and narrow. The good thing about a well-defined, narrow price channel is that it allows decisive actions on breakouts as they develop. Paris milling wheat chart is better looking, as Russia begins to slow down exports per quotas and taxes.

Wednesday morning very early trade has Chicago unchanged. Watch the channel for clues.

Stay tuned and we will see it as it develops.

MarketBullets® Tuesday Dec 17, 2024: Pre-Dawn  

     Saudi Arabia announced completion of a 804,000 metric tonne purchase of wheat in their international tender, some 150,000 tonnes more than expected.

     Russian shipments of wheat to Syria were suspended last week, but Ukraine has jumped to fill any needs. There is likely more to this than meets the eye. With Hamas severely reduced and Hezbollah on their  heels, Russian designs in the Levant are set back. The economic pressure on Russia due to their aggression in Ukraine is increased. The resolution to the conflict in Ukraine may be wheat price-positive if there is a violent climax, but in the longer run, all of those wheat hectares will be vigorously farmed, no matter who sits at the long tables in Moscow and Kyiv.

     In the background for wheat, corn is more supportive than soybeans as corn has found some healthy export buying, but beans are sitting sideways on long-term lows. Wheat rarely rallies very far without at least non-interference from the coarse grain sister contracts, so the environment is at least net neutral.

     Very early trade on Tuesday showed within 2 cents of unchanged across the red wheat futures exchanges.  It remains to be tested whether Paris can be strong enough to pull the global wheat price upward.    

     The trend for wheat remains sideways with just a slight upward bias, set in a set of tradable range boundaries. Stay on plan, The present trade is about 33 cents  below the 60-day, “Box-o-Rox’ moving average, which suggests continuing to make incremental cash sales as scheduled. There are marketing strategies that allow price protection with an open upside still intact. Call your merchant.

Stay tuned.  

MarketBullets® Monday Dec 16, 2024: Close  

     Sometimes the market murmurs like a sleep-talker about what’s on its mind (bear in mind that this reflects thousands of minds, including the infant Ai). On Monday the report came from the Commodity Futures Trading Commission (CFTC) that the large speculative trading entities have slightly reduced their net short-sold positions over the last week or so. That is only a slumbering twitch, but it is a required awakening sign for would-be buyers. Since there are few big price-influencing factors in play, the whole market is observing every detail, always a feature of slow and narrow markets. A trend following marketer has only to be both patient and observant in this environment. The challenge is to be prepared for at least a couple of different price scenarios.

     Monday gave us a mixed day across the exchanges, down 3 cents in Chicago, up about 2 in KC and down 4½ cents in Minneapolis Hard Red Spring (HRS). Paris gained €3.50 per metric tonne ($.10 per bushel equivalent). The Paris contract has become a key market of price discovery with regard to Black Sea wheat movements, if only because there is no other rational and transparent exchange closer to the Russian and Ukrainian export programs.

     The net tone is slightly positive, but still without substantial trend indication or any real buying or selling power evident.

MarketBullets® Monday Dec 16, 2024: Pre-Dawn  

     Argentina’s wheat harvest has reached about 64% complete. Buenos Aires Grain Exchange (BAGE) recently announced their wheat production estimate as unchanged at 18.6 million metric tonnes.

     Saudi Arabia last Friday issued a tender to buy 595,000 MT of wheat. Results are expected today (Monday) with shipping dates between February and April.   

     Ukraine’s Ag Minister on Friday increased their wheat harvest prospects for this marketing year to 16.2 million metric tonnes exportable.

     The value of Rubles per US Dollar and per Chinese Yuan, which has been weakening steadily since June of 2022, has pulled back from recent 33 months lows in a move that smells like Russian government market intervention, or maybe assistance from China. If that is the source of any Ruble strength, these sorts of market moves tend to be contra-trend and temporary in effect. This may be one of the only market windows that reveal the state of Russian economic. Please note chart(s) <here>.

     Crude oil has been steady in a range focused around $70 per barrel for West Texas Intermediate (WTI) for the last 4 months. The chart reveals a large descending triangle which is near to either confirmation or rejection. IF confirmed on the downside by a significant move below the $62-$64 range, the technical expectations will extend toward $51 per barrel, an undesirable level among OPEC members. If the price rises above $78.50 the target will be between $87 and $100.  The influence of Crude on wheat is indirect, but there is a positive correlation between wheat and crude.

     Diesel has been rising for the last 5 trading sessions and has returned to the top of a declining series of highs, an inflection point that may provide some new information if it is broken to the upside, otherwise the expectation will be a return to test the old lows about 15 cents lower than Monday’s early AM trading.

     The trend in the wheat complex is neutral. There are tight boundaries to the range in which Chicago Soft Red Winter futures have been trading since mid-November, a break of either side may yield a tradable move. For a wheat marketer, with a pending planned sale on the table, the most pressing event would be a drop below $5.40 in the March futures, about 17 cents below present trade and a trigger of undesirable momentum lower. This would make a logical spot to let go of a strip of wheat.  On the upside, the tripwire is at $5.69, about 13 cents over present trade. This is not exciting work, but it is at least quasi- logical.

Stay tuned.  There is more to come.

MarketBullets® Thursday Dec 12, 2024: AM

     The year in wheat is near complete.  The polaroids of New Years past are stacking together in a way that if you were to shuffle thru them at a certain speed (neither hasty nor lackadaisically but controlled and consistent) an impression of motion becomes available to the observer.  The visual cortex assesses the input coming from the thalamus and derives an estimate based on the sum of the images divided by the number of spaces between them and reports this data to the occipital lobe of the brain where the estimate is most useful in identifying all manner of threats and/or opportunities in the immediate environment.   Trends in culture, economics, politics, art, science and even the wheat market, are lining up such that each one seems to belong to a macrotrend proximate to a greater conjunction wherein these systems, previously understood to be stable and static are facing existential reorder of context, priority, and function.    

    IF we are able to grok the data’s relevance from the standpoint of an owner of wheat, an opportunity is at hand to make a valuable decision about what to do (or not do) despite the blurry outline of world supply and demand.  Wheat's value in a storage bin might begin to seem vulnerable to running aground in the shallows as the gravity of the macrotrend pulls the tide further from the shoreline while traders in waders sink in sandy muck with little recourse for protecting the commodity, and therefore revenue from fickle fate.

     Much like the flipbook of photos, the stochastics of the situation can reveal animations in trend tracking where the expansion of the seafloor and its grip on anybody caught unawares, grows lowly in potential until it can render any vessels and cargo stored therein unrecoverable and the owners forced to eat s slimy seafood supper of live bottom feeders sans nori or wasabi to protect their palette.

   SO, the lack of enthusiasm in the December wheat market can lead to dangerous complacency.  “As I am typing furiously away” (RIP Jerry Welch) the wheat market in Chicago is up 2 cents, inspiring more anxiety than enthusiasm.  Technically, the trend shows no evidence that the price must continue lower, while fundamentally, the news is bereft of any encouraging price influences. In the northern hemisphere, as log-able fieldwork hours shrink, the thinking season is at hand. The next year will bring some marketing challenges that can be planned against. It’s good to be ready when the moment arrives where implem-entation of a prepared, practiced performance can protect you from missing the sign or even pay you with a win. 

     We track this stuff. It’s definitely trackable. Some of the concepts that really help take practice.  Practice seriously, read and tell your friends to subscribe to the MarketBullets.

Stay tuned.

-Gabriel

MarketBullets® Monday Dec 9, 2024: Pre-Dawn         

 MarketBullets® Wednesday Dec 11, 2024: Pre-Dawn

     Wednesday early trade showed very narrow range trade in Chicago, up a couple of cents. KC Hard Red Winter (HRW) futures have put up a slightly more positive pattern than Chicago, but the general action is quiet, with low volume.

     SovEcon estimated Russian wheat shipments for November at 4.1 million metric tonnes, down from 5.6 million tonnes in Oct but above 3.4 million last year.

      Projected U.S. all-wheat ending stocks are reduced by 20 million bushels to 795 million, still up 14 percent from last year.

     White wheat exports are increased 15 million bushels to 210 million, on stronger-than-expected sales and shipments to East Asian markets.

     Projected 2024/25 global ending stocks are raised 0.3 million tons to 257.9 million but are still the lowest since 2015/16.

     There were no changes in Russian wheat numbers, even though many observers are projecting smaller wheat supplies out of Russia for the next year.

     The WASDE was a net mild positive for wheat, but near enough to what the trade had guessed that it was not a market-mover (December rarely produces surprises) . More data from USDA is due in the early days of January, with the 4th-quarter Stocks-In-All-positions Report and a fresh WASDE on Friday, January 10, 2025.

     The chart pattern for wheat is a very mildly positive 4-week rising triangle. There is very little momentum. The trade consensus is that without drama from overseas conflicts, or out-of-pattern weather issues, we will be in quiet price waters until January at least.

Stay tuned, even if only briefly every day. Stay on plan.

This stuff is trackable. Let’s track it!

MarketBullets® Monday Dec 9, 2024: Pre-Dawn         

     Accumulated U.S. wheat exports came out at 10.73 million metric tonnes (394.1 million bushels) and were up 32% from the same period in last year.

     Tuesday’s World Ag Supply/Demand Estimates (to be released at 9:00 AM Pacific, 11:00 Central) will review mostly demand-related factors. Average pre-report guesses from the trade based on a Dow Jones survey: U.S. Ending Stocks: 815 million bushels versus November’s official 816 million, World Ending Stocks of wheat for new crop (2024-25): 257.6 million metric tonnes, unch. Eyes will be on the Russian production estimate. The WASDE seems unlikely to spark price moves but cannot be ignored (yet).   

     The weekly Commitment of Traders (COT) report shows Large Spec entities net-short-sold at its largest since mid-April. In all of the data from January 2018 to present, the current net spec short-sold position is in the top 20% in size. These relatively large shorts will have to be bought back (covered) at some point, but to set off a rush to the exits and higher prices, it usually takes a trigger event, which the current market seems to lack.

      Egypt is continuing its experiment with various ways to procure wheat and other commodities from global sources, as in a recent attempt to secure massive long-term price-fixed contracts, more than half of Egypt’s annual needs in one swell foop. The idea being a tender request for commitments to some 3.8 million metric tonnes of long-term shipments. Global wheat exporters were wary of the terms, ultimately rendering the quote request unable to be filled due to requirements for financing, pricing structures and other risks. 

     Another avenue being pursued by Egypt, the largest importer of wheat in the world, has been private unilateral agreements negotiated directly with wheat sources instead of the efficient global tender system that has been used for many decades. This proposal, even as it has been promoted and encouraged by Vladimir Putin as a less price-transparent approach to commodity trade among autocratic states, is also perceived as threatening to the international tender system in which any qualified entity can participate.              

     Now there is a new wrinkle, as the Egyptian Administration has mandated that “Mostakbal Misr Agency”, an Egyptian military establishment, will assume all jurisdictions previously held by their General Authority for Supply Commodities (GASC). The impact of such machinations is unlikely to change the global wheat consumption patterns much, but reduction in price transparency in a competitive market is unlikely to be a favorable factor for sellers. More on this as it develops.

     The environment is dull, and December is a month abbreviated by a holiday week between Christmas and New Year. While Russia seems beset with issues like the collapse of their client-state Syrian regime and Iran’s problems in the same arena as Hezbollah struggles from an Israeli beating, wheat is moving easily in the global markets. Applying Paris Milling wheat futures as indicator, Black Sea prices are stable to slightly positive. The overall background is neutral, as the market hovers near long-term price lows. The trend is flat to very short-term positive. Price-driven motivation for cash sales is low, unless the price drops below the well-tested and defined low side of the recent range.

     It is reasonable to hold back on incremental sales, but if the tripwire price range in Chicago between $5.28 and $5.14 is broken to the downside, it will open the technical door to considerably lower prices.   

Stay tuned.

MarketBullets® Friday Dec 6, 2024: Pre-Dawn 

     Only minor changes, if any, to the balance sheet for wheat expected in next Tuesday’s World Ag Supply/Demand Estimates, to be released at 9:00 AM Pacific, 11:00 Central.

     A 10-cent up-day has become a rare bird, with a steady 45 degree up-angle all day Thursday. The market has once again acknowledged the flat sideways low side of the recent range with a bounce.  

     U.S. winter wheat has entered the dormancy season in better-than-expected shape.   

     Stats Canada report on December 5th showed the country’s wheat production this year totaling 34.958 million metric tonnes, below the pre-report average guess of 35.04 million, but above last year’s 32.946 million tonnes, or about +6.1%. Spring wheat, the dominant class by far was reported above the expected total 26.07 million tonnes. Canadian canola output is seen at 18.51 MMT, below 19.19 million tonnes last year.

     Russian winter crops are showing 37% in poor condition or not emerged versus only 4% a year ago. The share of winter crops in good condition was about 31%, compared with 74% last year and the lowest in over 20 years. 

     In the wake of a sharp surge in Ruble value over the last six trading sessions, Elvira Nabiullina, the governor of the Central Bank of Russia, confirmed that the institution was seriously considering raising the key interest rate again, despite it already being at 21%.    

     Australian wheat exporters are showing aggressive performance with the highest level of wheat exports for October in four years, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). Argentina and Australia are both competitors for the Pacific Rim markets most valued to U.S. wheat exporters. Both are expecting decent-sized crops as harvest advances in the southern hemisphere.

     Heavy rains over the past two weeks in Australian wheat country is causing quality problems. Some 2.5 to 5 million metric tonnes of wheat in the southeastern growing regions has already been downgraded to feed from milling quality according to observers, about 8% to 16% of the projected large crop. 

     Friday morning’s wheat trade was hanging on to Thursday’s gains, which actually began at about 8:30 AM on Wednesday just after hitting a life-of-contract low at $5.40 in the March futures contract. Thursday’s session was all upward and ended about 20 cents above Wednesday’s low. As of very early hours on Friday, the week-to-date net is a plus 11 cents. Paris was indicating an opening trade at a nominal call of +€3.00 per metric tonne (about +$.09 per bushel).

     The trend is still very tentative, since one nice up-day bouncing off of a new long-term low does not make a change in direction, but it does take some of the pressure off. We still are waiting for a more definite confirmation of a heading, maintaining trigger prices as before (see previous updates for specifics).

Stay tuned…there is always more.    

MarketBullets® Thursday Dec 5, 2024: Pre-Dawn

     The narrow, sideways wheat price range over the last 5 sessions is similar to the period between the Last Week (LW) of October and the First Half (FH) of November. That period was followed by a breakout to the downside that carried Chicago wheat futures to a 30+ cent decline and a test of the LW August lows. At some point this market will awaken, but it snoozes right now. The funds are short-sold, but without a spark of some news, will likely continue to add slowly to net short-sold positions.

     It is easy to become complacent in such dull market conditions.  It is relatively easy also to keep up with recent developments, or the lack thereof. Stay with us, as we will see and alert to changes.

     Recent European Commission data reports Marketing year-to-date soft wheat exports at 9.48 million metric tonnes versus 13.75 million tonnes for the same period last year. This is not a surprise factoid, but merely reinforces the gloomy fact that such a dramatic decline is not enough to fire up the buyers much.

     Cargill has announced plans to lay off about 5% of its 164,000 global workforce as declining crop prices have drained margins and hurt earnings and revenue.

     Stats Canada will release wheat production data on Thursday that is expected to show a healthy 35.04 million metric tonnes this year versus 32.95 million tonnes. Spring wheat is guessed to be 25.98 million tonnes of the total.

     From recent Reuters:  The proportion of winter crops in Russia from the 2025 harvest in poor condition or have not sprouted is over 37%. Apparently just 31% of the winter wheat crop in good condition versus 74% last year.

     The trend is sideways with a negative tone, but no conviction. Best to stay on plan, but if the wheat price stays inside of the recent range, we will hide and watch for a moment. No sleeping on watch!

Stay tuned.

MarketBullets® Wednesday Dec 4, 2024: Pre-Dawn

      The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) reports the country will likely produce about 500,000 tons less barley and 100,000 tons more canola than it thought three months ago. "Higher production in New South Wales, Queensland and Western Australia is expected to mostly offset reduced production and crop losses in large parts of south-eastern Australia caused by persistent dryness and widespread severe frosts.”

     On December 3, 2024. James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture, wrote, “Farmer sentiment jumped again in November as the Purdue University-CME Group Ag Economy Barometer climbed 30 points to 145. Both the Current Conditions and Future Expectations indices increased in November, with the biggest improvement taking place in future expectations. The Future Expectations Index increased 37 points to 161, while the Current Conditions Index rose to 113, 18 points above October's reading. November's sentiment improvement pushed the barometer to its highest level since May 2021, with expectations for the future also reaching their highest level since April 2021. Some of the reasons behind the improvement in farmer sentiment include expectations for a future regulatory and tax environment for the agricultural sector that is more favorable than expected prior to the November elections.    

     The effect on Farmer sentiment could be price positive if it causes producers to hold wheat off the market longer than they might have. In any case it is intuitively a better tone than the alternative; grumpy pessimistic farmers pinching pennies and not laughing at jokes.

     Argentina's wheat harvest is reported 38.7% complete.  Buenos Aires Grains Exchange (BAGE) has released an estimated production of 18.6 million metric tonnes. USDA has posted 17.5 million for Argentina this season.  

     Global economic uncertainty is on the rise, with Trump’s opening rounds already rousing China to reply with commodity (metals) tariffs of its own. Its probably a good idea to bear in mind that all of this is talk at the moment, and that Trump’s negotiation style is big threats followed by workouts and smaller threats. Uncertainty is usually a market-price-negative in general. What are usually background factors are going to be up front for a little while, as wheat fundamentals are not likely to change much until well into the new year. Watching things like crude oil, copper, interest rates, gold and currency relationships (Rubles per Yuan, or Yuan per Dollar) may yield a gauge of global economic health that can be applied to wheat price trends.

     For now, there is not much of a trend in wheat, as seen in Chicago, Paris, Minneapolis and Kansas City contracts. The setup is not hard to read, so monitoring the price range boundaries is likely the best tool.

     Next crop production and WASDE report on Tuesday, December 10, 9:00 AM Pacific Time / 11:00 AM Central.

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday Dec 3, 2024: Pre-Dawn

     Russia has tapped the brakes on wheat exports as expected. Russian wheat export quotas are set on sales totals by individual export companies based on their historical market share. This being well-anticipated by the trade, may not be enough to ignite a rally by itself, but it does provide a positive background. Their opening shot is to make the Feb-June total 11 million metric tonnes, versus 29 million tonnes last year.

     The market is looking for a short-covering excuse. Year-end portfolio adjustments among the big trading funds will shift some money around. Easing of the U.S. dollar and healthy U.S. export numbers compared to last year? How about a just plain “technical correction” without any particular reason? Chicago can do 25 cents up without sending out invitations. The recent high at $5.77 in the March Chicago futures is the target. We already know the lower edge. 

     We will be watching Paris Milling Wheat futures for a clue.

     Stay on plan. Its OK to hide and watch since we have marked the hard edges of the price range and have orders ready (or even placed in advance).

Stay tuned. Every day. All the time.   

PS - Illinois produces the most soybeans of any state. If you are in love with the Illinois farmer’s daughter, does that mean you have a soybean crush?

MarketBullets® Monday Dec 2, 2024: Pre-Dawn

     KC Hard Red Winter (HRW) has posted a new low. Minneapolis Hard Red Spring (HRS) futures have not hit such a low, trading early hours of Monday, Dec 2 about 19 cents above the August 26 seasonal low of $5.63, nor has Chicago, trading 30 cents over its summer low, and 15 cents over the more recent Nov 15 dip to $5.28. All these price points represent significant trigger points if they are breached. The Trend is flat to lower. The charts are ugly, and the market is seeking any kind of fundamental push.

     As we approach the calendar year end, there is a certain amount of position adjustment to be expected among the large speculative trading funds within the next few weeks. They have been rebuilding their net short-sold positions since early October and have now reached about the same net short position as they held in August when the seasonal lows were identified. The subsequent buyback was a significant part of the reason for the 85-cent rally into early October. There is no presently tangible trigger for a similar rally, although Russian attacks on civilian vessels in the Black Sea, notably in the territorial waters of NATO-member Romania in September, played a central role, along with some weather-related issues for Russian wheat.

     It seems probable that the same type of stimulus will re-occur at some point, On the other hand, if there is a cease-fire in Ukraine, we will all breathe a sigh of relief for the folks whose      lives are at stake, including the hapless young North Korean soldiers sent into a meat-grinder war far from home, BUT there is a wheat marketing problem; the global wheat market will also be relieved, and likely to relax prices as war-premiums are unwound, a serious potential negative factor.    

     The market has built a fair amount of base pattern since late September, with a sideways range and several tests of the lows forming a flat warning line that can be useful as a support line, complete with clustered standing-sell-stop orders at or just below the level of the range lows. For a trader, there is very little meat on the bone here. For marketers, there is a test of patience, but also a period where the only kind of cash sale is incremental on schedule. If the price penetrates the low side, there will likely be a burst of selling that will carry it lower still, the kind of thing that makes earlier crappy sales look better later. Holding on to stored, unpriced wheat is still not the best strategy. It’s expensive and risky and has worked in the past just enough that we can only remember the times it was successful.             

     What we will do here at MarketBullets., LLC, is to grudgingly let go of slender slices of old and new crop wheat each month, hoping to see a price bounce large enough to take the pressure off. We will use the recent lows as warning lines.

Stay tuned.  

MarketBullets® Wednesday Nov 27, 2024: Close

     Friday is First Notice Day (FND) for December wheat futures, the first day that intent to deliver actual physical wheat may be filed by any holder of a short-sold contract that has not been previously offset. Even after receiving notice, these contracts can still be traded (offset by buying a futures contract and washing out the position) until the last trading day (LTD) of the December 2024 contract at mid-month (before FND is much to be preferred). It is the short-sold contract holder that determines delivery timing and location (limited by exchange rules) during the delivery period of the first half of any futures expiration month.

     The process of tying a futures contract to physical delivery involves formal notices and invoices, can be expensive and is quite easy to avoid by offsetting the contract before FND. The only ones for which it is practical for futures contracts to be delivered or received are the companies that extensively use the “designated delivery points”; elevators certified and specified by the exchange.

     Futures contracts end up being real cash contracts at the end of the life of every deliverable trading month. The vast majority of contracts traded in each designated month are offset long before making or taking delivery becomes necessary.

     The old trader’s story about the private person who traded wheat contracts and was not paying attention, heard the doorbell ring and opened the door to find a truck driver in the driveway asking, “OK, where do you want me to put this wheat?” is amusing, but not real. There is a system that makes that story really impossible. A phone call, an invoice for full contract value (5,000) bushels) and an elevator lift charge, among other fees, would have to be paid and completed first. No fear of delivery, but if you do not want your broker’s back-office staff and others very frustrated with you, please offset early!

     The Chicago wheat contract slid into Wednesday’s close with a loss of 9½ cents. At $5.94½, it is resting just on top of the previous low close at $5.42. The pattern is ugly in the eyes of marketers of wheat. A test of the August lows is imminent. If the futures price declines below that low on a closing basis, there is likely to be a bit of panic selling, or at least it will trigger larger trading fund short-selling. A break like this is an opportunity to sell a bit of wheat, as bitter as that may seem to be. Reducing risk exposure in a confirmed negative trend is smarter than it may feel. The confirmation is not in-hand, but hold and watch for the whites of their eyes, boys.

     The market needs a fundamental reason to buy, but that is not visible at present.

This stuff is trackable. Let’s track it!  

PS - The Russian Ruble continues to unwind, now at long-term high territory. See Previous comments for more detail.     

MarketBullets® Wednesday Nov 27, 2024: Pre-Dawn

     The Ruble continues to unravel versus the Dollar Index and the Chinese Yuan. The impact of this trend on the Russian war-time economy is slowly eroding their ability to operate, potentially pushing Putin into an economic corner. How he will react is not easily drawn, but the pressure is rising. For wheat the short-term is less expensive Russian wheat, even as the much-discussed export quotas and higher export taxes are applied. Intuition says this is possibly a net price-positive factor.

     The U.S. Dollar is very strong, based on healthy economic numbers, a completed election, and steady interest rates. With core inflation improving and a stable economy, the “real” interest rate for the greenback is a positive number greater than most competing currencies, causing capital flow into the dollar. This factor is a mild net price-negative.

     It is good to see some movement to turn the heat down on the Israeli/Hezbollah war. The impact on the markets is psychological, but none-the-less positive. Even as this is in the works, Jordan is buying wheat, some from Cargill if the reports are right. For the overall wheat market, this is another psychological boost, even if it is not being originated from the U.S. Net price positive.

     The wheat price charts show a narrow range. The entire range of Monday and Tuesday’s trade has been within last Friday’s range.

     The Pre-Dawn trade in Chicago shows March futures trading a dime above the lows from November 25 ($5.36), which is about 16 cents above the seasonal lows of November 14 at $5.20. These are the warning lines, below which there is plenty of room for wheat price declines. A failure to hold above these lines suggests a new set of downward steps. If you have wheat on the table to be sold, holding it is reasonable here, but if the warning lines are tripped, better let go. What we really want to see is a move above $5.58. That would form a new pattern with some upward potential. Until then, the market is slowing down as we move into the holiday season.

     It remains that the market environment is risky, with factors that could explode easily, so we must observe and note the tone and volatility even as we eat holiday meals.

Stay tuned. The next year is going to be “interesting”.

MarketBullets® Tuesday Nov 26, 2024: AM

     The Russian Ruble is clearly getting weaker, as it is approaching the value levels seen in February and March of 2022, coinciding with the invasion of Ukraine. It is not just the U.S. Dollar, but also visible in the Ruble/Yuan. The impacts of this trend are many, including pressure on the Central Bank of Russia (CBR) to raise interest rates, but the easily identified effects are to make Russian wheat and oil less expensive, and to make war expenses to Russia greater. This trend seems likely to play a key role in any decisions about negotiating an end to war in Ukraine.    

Winter wheat crop condition as of November 24:

     WA 48% Good to Excellent (GEx) -5% Versus 53% Last Week (LW)

     OR 54% GEx -6% VS 60% LW – ID 47% GEx Unch from LW

     National: 55% GEx +6% from LW, mostly gains in TX, OK, KS hard red winter states.

     Wheat crop condition reports are coming to a seasonal end and will resume in April.

     As the wheat market approaches the long Thanksgiving weekend (with limited Friday attention), the price charts show another bounce off of the sensitive price zone that has discovered buyer interest repeatedly. This pattern is intrinsically positive, especially since it has produced a small “higher high” which is an important setup for a positive pattern.

     The market still has no price positive aspects, including better crop conditions in major crop areas heading into dormancy season in the northern hemisphere.

     We are in a technically driven period which may end up being highly dependant on trading funds for momentum, tricky business at best. This is where a trading plan, perhaps with some form of optimization for such occasions. Never fear, the charts are here! We hide and watch.

Stay on the track, tuned in, turned on and far out!  

MarketBullets® Monday Nov 2251, 2024: Pre-Dawn

     Chicago wheat futures in the wee hours of Monday, November 25, 2024 were down 7¾. Now we head into a short week, with Thanksgiving on Thursday and rookies at the desk on Friday while the boss takes a well-deserved break. The wheat market is approaching another test of the previous lows. December will have its First Notice Day on Friday and go into its delivery period  for the first couple of weeks of December. March is the lead contract on the charts now, as the trade has mostly already rolled out of December into deferred months.

     Paris Milling Wheat closed Friday with a very narrow trading range and was trading 3-4 Eurodollars lower Monday morning.

     The big wheat futures contracts are all in a trading range. If Chicago futures fail to hold above $5.28 Dec ($5.46 March) in the next couple of sessions, we will go into a long weekend with no momentum. The wires will be pre-occupied with Trump’s cabinet picks unless war intrudes on that sacred ritual. Meanwhile the price of wheat is trending lower.

     Stay in harmony with the trend. Stay on plan. This market has very little energy.

It’s trackable, even when it’s boring.  

MarketBullets® Thursday Nov 21, 2024: PM

It is inevitable that anyone interested in the long-term price of wheat must maintain awareness of the activity of the largest wheat exporter in the world, as well as the impact of its close neighbor, the Ukraine. Ukraine has slipped to number 6 in the rankings, but there is no doubt in the future those fertile hectares will be active. The decisions of the leadership in those two nations will have direct impacts on the global price of wheat going forward.

We asked ChatGPT about the consequences of the use of nuclear force in Ukraine by Russia. The following summary is at least the basics of what Putin has to consider before he pushes any buttons:

“The use of nuclear force by Russia in Ukraine would lead to significant global and regional consequences, including:

Global Consequences:

1. Escalation of Conflict: A nuclear strike would likely provoke a severe military response from NATO and other nations, escalating the conflict into a broader war.

2. Humanitarian Catastrophe: The immediate impact would be catastrophic, with large-scale loss of life and long-term health repercussions due to radiation exposure.

3. Global Isolation: Russia would face unprecedented isolation from the international community, including harsher sanctions and diplomatic repercussions.

4. Nuclear Proliferation Concerns: The use of nuclear weapons could lead other nations to reconsider their nuclear policies, potentially accelerating arms races or encouraging proliferation.

5. Economic Repercussions: The global economy would face a significant downturn due to uncertainty, disruption of trade, and potential energy crises.

6. Human Rights Violations: Any nuclear attack would lead to serious violations of international humanitarian law, drawing widespread condemnation.

Regional Consequences:

1. Immediate Regional Chaos: Neighbors of Ukraine, particularly NATO countries, may increase their military readiness or intervene more directly in the conflict.

2. Refugee Crisis: A nuclear event could trigger mass displacement, leading to a significant refugee crisis across Europe and beyond.

3. Security Dilemmas: Countries in Eastern Europe may feel threatened and may seek to enhance their own military capabilities, leading to further regional militarization.

4. Geopolitical Shifts: Alliances may shift as nations reassess their security posture in light of Russia's nuclear capabilities, potentially strengthening NATO's resolve and presence in Eastern Europe.

5. Regional Stability: The use of nuclear weapons could destabilize the existing order in Eastern Europe, encouraging nationalism and potentially leading to conflicts in other areas.”

     The market is telling us that the war in Ukraine has increased in intensity, but the impact on wheat business is not dramatic so far. The increase seems mostly due to anticipation of a global attempt at ending the invasion of Ukraine via negotiations.

     So, Yes, If Vladimir, sensing an abyss yawning before him, has a tantrum and decides to nuke-out and tip over the game-board the price of wheat could go straight up, but its probably a bad bet. It’s hard to imagine that the old KGB guy doesn’t have an escape plan, and he definitely hasn’t lost yet.

     Word on the street is that Russian farmers may be allocating fewer hectares* to be planted to wheat due to low prices. This is undoubtedly happening in more areas than the Volga Valley. The big wheat wheel turns…

The Russian Ruble is reaching its weakest dollar value in global trade since February-March 2024, the time of the initial invasion into Ukraine and the weakest Ruble exchange rate on available data. In terms of the Chinese Yuan, the Ruble is also weakening, as it nears its all-time lows. Obviously this is a troubling development that is likely to make war-time budgeting difficult for Mr. Putin, but it does make his wheat less expensive to his customers. Meanwhile, the U.S. Dollar Index has pushed into new 2-year highs dating back to November 2022. (The Dollar Index does not include the Chinese currency or the Ruble in its composition).

     The micro-trend in wheat prices is four days up and one day down since last Thursday the 14th for a 19-cent gain. Very early morning trade on Friday was down 2½ cents in Chicago and Minneapolis, and -1¼ in KC. The larger, 36-session channel is negative, with a pattern of lower highs and lower lows uninterrupted since the first week of October. The lowest that move has reached is $5.28 in Chicago, 8 cents above the August low, a failure of which would be the breaching the fence into lower price territory.  

Chicago wheat contracts have achieved the nominal downside target of the large, negative “head and shoulders” pattern that began on a rally following the August long-term lows. This is not a signal, but it does suggest the opening of a new phase.

Paris Milling Wheat futures are more positive over the last 5 trading sessions that we have seen since the last half of September. This contract is useful as a gauge of Black Sea regional wheat values. Given the weather struggles that the European Union’s largest wheat producing member has seen, with massively reduced exports, the price should have been more positive earlier but for Russia’s aggressive sales program. Now, with (Russian originated) rumbles of Russian export quotas and higher taxes, Paris wheat futures may be in a sort of price bird-dog role. At least it is an indictor that we should not ignore.

     The market is still working on a low-end base, with increasing war-volatility. There is no mandate to hold back on planned incremental sales. The fundamentals remain unfriendly. Opportunistic sales on schedule make sense. There is still a respectable carrying charge built into the red wheat contracts. The PNW white wheat market reflects higher deferred prices versus nearby. IF Chicago catches a rally, Soft White seems likely to respond willingly. That’s IF.

Stay tuned. There is always more.     

*1 hectare = 2.4715 acres

MarketBullets® Thursday Nov 21, 2024: Pre-Dawn

     Click <here> to read the opening chapter of “The Problem” about why it is so hard for producers to let go of stored wheat, and other things to ponder about ways to approach the wheat market.    

     Wednesday night into Thursday morning trade was mildly positive on what begins to feel like holiday attitude trading. In the absence of motivational changes in the news and data flow, many are focusing on further geopolitical educational efforts and technical chart applications. The short-term wheat price pattern is nearing the long-familiar region of price sensitivity established beginning in July of 2024. The behavior of the wheat price will be observed closely in the $5.60 to $5.80 range. A break to the upside out of this well-trodden range would require news developments we do not have today, and attract additional buying. The downside tripwire range is $5.20 to $5.28, a failure of which would be a major break. The marketing decisions resulting from this technical picture are all still in the light of a very large and long-term downward bias. Steady as she goes, Cap’n.

     The Russian response to the Ukrainian use of U.S. and U.K. origin missiles to strike deeper into Russian territory has been muted, even with statements of nuclear threats. The calculus of whether the Russians are likely to use tactical nuclear force is complex, with Chinese and other Russian allies measuring potential impacts on their own their geo-economic status. This seems unlikely unless Vladimir has a temper tantrum, which would be uncharacteristic of the chess player.

     The wheat market is healthy, if boring. The next week or two seems likely to produce a backing off and retest of the recent lows, but that is a “Speculation”.

Stay tuned. It’s trackable.        

MarketBullets® Wednesday Nov 20, 2024: Pre-Dawn

     Wheat has honored the technical lows as defined by retracement and previous support zones, thereby avoiding a treacherous trap door into the unknown (price zones that have not traded since the summer of 2020, well before the Russian invasion (Feb of ’22). The long-term perspective for wheat is that the current price is actually the higher side of a range that has been tested repeatedly over the last decade, under all manner of conditions. The downside risk, which is always with us, is substantially smaller than it has been for 4 years. Costs of production have risen for every wheat producer in the world, altering the forward planting decisions for wheat acreage in many regions. This is a very vague and slow-moving indicator that remains in the background, but with global stocks of wheat supplies already at historically reduced levels, it makes any continental-sized weather, political upheaval or financial stress event much more compelling; a difficult-to-measure risk increase that is net  price positive.

     The present, short-term market has no mandate except to move wheat when, where, and as-needed, a demand-driven environment that does not provide concentrated motivations for up-trends like a weather market can. This seems likely to last into the new year, making marketing of physical wheat largely a calculator and chart driven affair.

     The trendline for wheat is stretching out sideways with a very slight upward bias, trading in a range $1.50 or so in breadth. The last time with this general pattern was the 4-year period between 2016 and 2020. Notably this coincided with a regular political cycle in the U.S. that was remarkable in many ways. This co-incidence is not enough to use as a prediction. In fact that would make a much too slender reed upon which to trade one’s livelihood. It is mentioned here only as a side-note.

     The global wheat crop-condition looking forward is good, with a  few weak spots. There are still lots of hungry folk that will buy wheat, and the world is still stable enough to sell and ship it to them. Any weather deviation from the norm may create a tradeable upward price move, but there is no indication that this is likely as the northern hemisphere moves into dormancy and the southern producers get into harvest.

     The marketing environment for wheat producers is demanding an opportunistic and attentive posture to sales. For the moment it is a buyer’s market. A thoughtful and deliberate marketing plan is likely to yield a significant advantage over the bin-as-a-checkbook style this crop year.

Stay tuned here. We will see the big changes emerge clearly on the charts.

MarketBullets® Tuesday Nov 19, 2024: Pre-Dawn

     Accumulated U.S. wheat export sales to date in the current crop year have totaled 9.84 million metric tonnes, 35% ahead of the same period in last year.

     PNW winter wheat crop condition as of Nov 17: WA 53% Good-to-Excellent vs 54% Last Week, OR 60% GEx vs 67% LW, ID 47% GEx vs 40%42% LW.

     The “Double-Digit-Poor-Condition” Club for as of Nov 17 included CO at 10% (a 2% improvement, NE at 20% (a 7% increase in poor condition acres, all coming out of last week’s “Good” category), OK at 15% (a 2% improvement), SD at 27% (1% worse), and TX at 14% (5% better than last week – also dropping from 15% “Very Poor” to 8% this week). Kansas dropped out of the club to 9% this week from 10%. What a difference a little moisture makes!  All of the above are HRW states, and the net is better condition.

     National winter wheat condition for 18 states is 49% Good-To-Excellent, a 5% overall improvement.

     The dominant headlines are set to be Russian response to missile rules being relaxed for Ukrainian attacks into Russia, “Trumps Picks” for cabinet positions, and retail activity levels in the fourth quarter. Also, why is Dallas having such a melt-down? The eye-rolling and appeals to the sky were at maximum on Monday night…

     Russia, although talking a great story about export quotas about to hit, is not one to leave wheat money on the table. They will milk the concept of limited sales as long as possible before applying the brakes on sales. Lets not get too bullish on that one idea.

     The wheat futures chart shows trading perilously close to long-term lows, but an attempt to rally, mostly on short-covering. With country movement slow and Russian wheat entering dormancy under poor conditions, there is still a slight haze of friendly uncertainty. In the macro-background the statistics of global supply are still showing lower levels than recent years. These are not compelling price movers in the short term. The drivers of this market are mostly technical and short-term in nature, and it is unlikely that will change before the first of the new year.

     The wheat price trend is not positive. There is no buy signal flashing, but the downside pressure is lower than it was just a couple of weeks ago. A marketer could justify patience here, but if the price drops below those lows, e.g. below $5.28 to $5.20 in Chicago December futures (or $5.46 to $5.42 in March), there is bound to be some selling energy released. How much of that emerges depends on when and how the barriers are broken. The market is well below the Box-o-Rox 60-day moving average, so that indicator says, “no delays on planned incremental sales”.

Stay tuned.

MarketBullets® Friday Nov 15, 2024: Weekly Close

     Paris Milling Wheat reached the 78.6% downside retracement of the downward move that began in early October and showed a healthy bounce on Friday. Even with very low production and export figures, French (and European Union) wheat prices have been dominated by Black Sea export prices.

     The wheat complex is in the process of testing its seasonal lows, reached in late August, with Chicago Soft Red Winter (SRW) ending the week at $5.36½ in December contracts, versus the last week of August at $5.20¾. KC Hard Red Winter (HRW) is also within a nickel of its August low of $5.27¼, while Minneapolis Hard Red Spring (HRS) touched within 3 cents of its summer low.

     The big spec funds added to their net short-sold positions over the last 10 days in both Chicago and KC. They may try to press this market lower to “run the stops” that cluster around significant previous lows, but fundamental reasons to go lower have been substantially addressed, at least for the moment, making the current test of the lows even more useful as a trend gauge.

     The next couple of months will be focused on Russia’s export management efforts, with potential quotas and taxes drastically reducing their pace of sales and shipments. This will push some of the demand back toward the U.S. and especially the southern hemisphere, where Argentina and Australia will be bringing significant export supplies to the window. If there is a time-range for improvement of wheat prices it seems likely to show up between now and the first couple of months of the new year.  U.S. harvest is now about 5½ months from early movement, while Argentina is about to start cutting in 2-3 weeks, and Australia has already begun in some regions and will continue until February.

     The week just ended seemed like a “blow-off”. Friday’s little rally felt like an adjustment as a recognition of a low. This is all just intuition, which is a notoriously poor way to make trading or marketing decisions, but expressing this kind of attitude is part of the process of centering a marketing sales plan decision so it sticks. More confirmation is needed to confirm a turning point here, but the first step is completed. Now we hide and watch for a minute.

  This stuff is certainly trackable. Let’s track it!

PS = Not every price increase is due to “inflation”. The underlying cause of inflation is excessive amounts of dollars in circulation, principally created by the issuance of debt instruments.

MarketBullets® Friday Nov 15, 2024: Pre-Dawn

     Government debt has risen by half a trillion dollars in the last few weeks.

     The interest on that debt will reach $1 trillion per fiscal year sometime in the next 18 months. <CBO Outlook Feb, 2024>

     In Dec 2023, the annualized cost of servicing the debt was 14% of total federal spending. 

     The Dollar Index is rising because interest rates are rising, making debt service more expensive and anything exported from the U.S. less competitive.

      Recent years of the U.S. national debt:

• 2024: As of November 2024, the U.S. national debt was $35.46 trillion. 

• 2023: The U.S. national debt was $33.16 trillion. 

• 2022: The U.S. national debt was $30.92 trillion. 

• 2021: The U.S. national debt was $28.42 trillion. 

• 2020: The U.S. national debt was $26.94 trillion. 

• 2019: The U.S. national debt was $22.71 trillion.

     None of the above is insurmountable, but it will have a major effect on policy.

     The wheat price is responding to a supply/demand balance that reflects an operational global surplus of wheat available, even as global statistics imply tightness. As the wheat price levels off from recent declines, the movement of cash wheat will be much slower. We are back at the seasonal lows. A failure of those lows to hold prices up will open the door to much lower price targets, but as the price reaches to or below the cost of production, the market will adjust.

     The trendline is negative, but the rate of descent is slowing. It is still best to stay on planned incremental sales, including new crop. The cost of storage is going up, and there is still downside risk. There are still good marketing tools that can help add to sales revenue if used appropriately. Call your merchant.

     Stay tuned, stay awake, stay on plan.

MarketBullets® Thursday Nov 14, 2024: Pre-Dawn

     As of the small hours of Thursday’s trade, the U.S. Dollar Index is up 6.93% from Oct 1 to Nov 14, now at its strongest since November of 2022. Although this has been in the news, the relationship between nearby wheat prices and the actual Dollar Index is not extremely tight. A change like the one that has occurred since October is significant, but the competitor currencies, .i.e. Canadian, Argentine and Australian, are not well represented in the traditional Dollar Index (see annotations on chart for index composition). There are other factors that are playing a larger part in the wheat price breakdown over the last 4 sessions, during which Chicago has dropped 33 cents from last Friday’s close. KC has slipped 25 cents and Minneapolis is off 27 as of the close on Wednesday November 13. Paris Milling Wheat lost the equivalent of 20 cents.

Thursday’s very early trade in Chicago is quietly down about 2-3 cents, as it is also in KC. Minneapolis is up 1-2 cents.

     Most of the softness in wheat prices can be traced to a lack of global buyer interest and some significant technical chart pattern breaks that have stimulated the funds to add to their short-sold positions.

Global news is mixed.

     There is talk that Russia is on the threshold of imposing significantly smaller export quotas in the face of a declining crop size, surging current exports and a weak Ruble. This is probably the most likely idea to slow the decline or prop up the wheat price, which has reached very near some lower technical objectives that have been in development for many weeks. There is no indication of this yet, but it bears watching.  

     FranceAgriMer continues to cut forecasts for total wheat exports, now 9.89 million metric tonnes versus the previous, already drastically cut, 10.03 million tonnes, a 40% drop from the 16.6 million tonnes exported last year.

     Russia’s 2025/26 wheat crop acreage is expected to drop to the smallest since 2018/19 at 15.4 million hectares (38.1 million acres) according to Rusagrotrans, a Russian railway infrastructure operator for transportation of agricultural and mineral raw material bulk cargoes by special-purpose hopper cars.

     Argentina’s wheat crop estimate from the Rosario Grain Exchange has been revised to 18.8 million metric tonnes, a 0.7 MMT (3.6%) decrease from the previous estimate.

     The wheat price trend is still lower, until its not. Since we are marketers and not traders, our interest is in identifying and confirming actual changes in price direction, which takes time and always seems to task the patience.

     The stuff is trackable, though, so let's track it!

PS – The honeymoon for the new presidential administration seems to be eroding quickly. It is sure to generate some anxiety, and markets in general do not respond well to uncertainty. Volatility is virtually certain to rise, so stay cool, stay calm, and stay safe out there!

MarketBullets® Wednesday Nov 13, 2024: Pre-Dawn

     Tuesday saw a confirmed wheat market break out below the neckline of the head and shoulders pattern on the daily December futures chart for Chicago Soft Red Winter (SRW) wheat. This line had been tested and re-tested over the period since October 28. Now it is difficult to claim any existing short-term uptrend. The last defensive hope of the entire post-August upward price effort is the single seasonal low at $5.20 on the December contract chart, about 26 cents below the trading level just before midnight on Wednesday, November 12. The nominal (thumbnail-estimated) downside target of the head and shoulders pattern is between $5.25 and $5.35.

     Since we do not attempt to call actual trading signals, these ideas are intended only to illustrate ways in which to identify a trend. In this case, if there had been any hesitation to adhere to a planned incremental sales program, now the support for the idea of an uptrend is absent.

     Box-o-Rox rules released the brakes on planned sales on Nov 11. This is not a trading signal, but an indicator that the value of holding back intended incremental sales of cash wheat is poor.

     The market is adjusting to improving crop condition in the U.S., Moisture in the Russian wheat region forecast and a stronger U.S. Dollar. All of this is known to the market, but getting competitively priced wheat into the hands of end-users is requiring lower prices.

     PNW winter wheat condition has improved with WA at 54% Good-Excellent, versus 51% Last Week, OR 67% vs 63% LW, and ID at 42% vs 43% LW. National winter wheat gained 3% to 44% Good-Excellent for the week ending Nov 10.

     Longer-term, there are potentials for a supply squeeze. Russia has experienced a drought that has slowed new-crop seeding. Rainfall in many parts of the (very wide) district was at 20-year low in the five weeks to October 6. If this condition continues into the late winter-early spring, say January-March 2025, the size of the market adjustment to global provisions of wheat will be noticeably positive. This is probably the largest potential upward factor, other than a failure to see moisture to finish making the crop in the Hard Red Winter states.

     The chart is pointing lower. The U.S. crop is established and growing. We all know that the northern hemisphere crop is really made in late winter/early spring. For a rally of significance, we will require a bigger and better set of motivating factors with which to push the buyers into action.    

This stuff is trackable. There is always a chance. Let’s track it!

MarketBullets® Tuesday, Nov 12, 2024:  Pre-Dawn

     Monday’s quasi-holiday did produce some interesting trade, as by about 8:00 AM Pacific Standard Time Chicago was down 20 cents, but very soon after that hour, the Dec started to claw back up and managed to close “only” 7¾ lower for the day, well above the challenge lows that make up the lower range boundary that has been so reliable for the last 11 trading sessions. Normally that kind of volatility and a “toe-dipping” behavior in futures would be a suggestion of a stronger pattern ahead, but since Monday was not really a regular business day it has to be scored as suspect.

     There are very few reasons to motivate the big money to move into the long-bought side of wheat. That group has added to their long-bought corn and just a tid of wheat, but no drama. The world is still shaking off the stress of the U.S. election as everyone tries to get a handle on what to expect next. It’s a kind of honeymoon that may not last too long, but for now it seems there are country leaders waiting to see what’s next.

     The condition of the wheat crop in HRW country has improved a few points, but it is still a long way to the bin from here. The crop size could grow quite a bit with the right weather.

     The wheat complex, including Paris, Russia and U.S. exchanges waits for a sign. For the moment, the range lows look like a hay rake along the bottom line, a hint that there are some buyers hanging around.

Early trading Tuesday was near unch’d, still honoring the support line. Let’s just hide and watch for the moment. Things could change in a quick hurry, shure, shure, yah you bet!

Stay on this frequency for updates.   

MarketBullets® Monday Nov 11, 2024: Pre-Dawn

      Veteran’s Day – No banks, no bonds, just grains and stocks

     Veterans Day, Monday November 11, is a federal holiday that was created 106 years ago.

     On Nov. 11, 1918, the official end of World War I, an armistice between the Allied nations and Germany began on the 11th hour of the 11th day of the 11th month.

     The day is intended to be a "celebration to honor America's veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good,"

     116,515 American soldiers died in World War I. As of today, including those honored on that first Veteran’s Day, officially over 733,000 American military personnel have died in war…about the same as the entire population of Denver.

     Here is to thinking about those men and women; about why and what they and their families sacrificed for us, and how perhaps we might recognize the personal value of that costly gift to each of us.     

     The wheat market is open Monday. These odd, half-holiday markets can be strange and volatile. Early trade Monday morning has Chicago pressing hard on the chart price lines that we have designated “support”. A close below that line at about $5.57 in the December contract will be noticed by the trade and treated as a trigger by some of the funds.

     If you have been waiting for a signal, this one is only slightly suspect due to the holiday, but the trading computers don’t know or care about that. We will be treating a break downward as a re-establishment of a negative trendline. Confirmation will come a few days later.

Stay tuned.

MarketBullets® Friday Nov 8, 2024: Post-WASDE Market Close

     WASDE: “The outlook for 2024/25 U.S. wheat this month is for slightly larger supplies, domestic use, and ending stocks but unchanged exports.”

     “The global wheat outlook for 2024/25 is for larger supplies and consumption, reduced trade, and slightly lower stocks.”          https://www.usda.gov/oce/commodity/wasde/wasde1124.pdf

     Wheat spreads are shifting toward premium Chicago over KC and lower carrying charges in Chicago forward markets. The implications of the changes are counter-intuitive (see notes under “Spreads” charts.

     The Chicago wheat chart shows a very flat range that is now 10 sessions old. The wheat complex, including Paris Milling Wheat, is without a mandate. The WASDE on Friday morning produced no trading edge, leaving the market flat. When the development of factors with enough power to move prices emerges, it will break the price out of the sideways range. Meanwhile, it seems prudent to hold until that obvious shift becomes visible.

     This is a trackable animal. Let’s track it!       

MarketBullets® Friday November 8, 2024: Pre-Dawn

     Export sales for the week ended Nov 1 were 20% below the 4-week average. As of week 22 (42.3%) of the marketing year, the sales total to date is 13.9 million metric tonnes, 61.8% of the current USDA target for the year of 22.5 million tonnes, which will be revised as of the the World Ag Supply/Demand Estimates (WASDE) to be released this morning at 9:00 AM PST / 11:00 Central. Fresh weekly export sales will also be released Friday morning.

     Corn is selling well, as we are in the period before Southern hemisphere supplies hit the market and ethanol feed stock demand is strong. Corn charts are in a well-defined upward trending pattern that started from August 26 lows, now 41 cents below today’s trading. The pricing health of the sister grain for wheat is a positive background factor. Soybeans are also in a mild positive slope, less convincing than corn.

     Moisture, that money that falls from the sky, is improving across a wide proportion of U.S. wheat production zones. Russia is still waiting for rain, which may end up being the power source for any significant wheat price strength in months ahead.

     The U.S. Dollar Index reflects a strong Dollar value. Chinese Yuan per dollar continue to be within “Planning Ranges”, and the Russian Ruble is at its weakest against both the Dollar and the Yuan in a year making Russian wheat easier to buy for import, but may be causing some wrinkles on Putin’s forehead as it also makes it more expensive to operate a war.

     The general attitude in the markets is cautious optimism with regard to The Trump Effect. It is premature to try to make this into a major market factor.

     The Chicago December delivery contract is now in its 10th consecutive day of a tight sideways  range from $5.57 to $5.80. The pattern is maturing and the trade is likely to react to a breakout in either direction. All that is lacking is a motivational trigger factor…WASDE, Russian policy change, Chinese purchase…it does not have to be a big blast.

     The trend can be argued to be positive as long as it remains above the low end of the flat zone. The price is below the Box-o-Rox simple moving average line, which is a setup for scheduled incremental sales to be completed without delay. The good thing about our little flat zone is that it gives discreet price triggers not very far away from current trade levels.  It does require some discipline to act on those triggers!

     Stay tuned to this channel for the next chapter…

Market Bullets Wednesday November 6, 2024: Pre-Dawn

     Very early trade Wednesday Republican morning saw Chicago December delivery wheat contracts trading down 7-9 cents, KC Hard Red Winter (HRW) wheat down 8-9 and Minneapolis Hard Red Spring (HRS) off about 6 cents. No new signals, with the price near the center of the 8-session range between $5.58 and $5.80 in the Chicago December contract.   

     The November World Ag Supply/Demand Estimates (WASDE) will be released Friday Nov 8th, 9:00 AM Pacific / 11:00 Central.

     Interest rates are rising.

     Yuan is weaker – Dollar Index is Flat

     Gold is off $77 per Troy ounce on the Wednesday session.  $128 per Troy Ounce from its October 30 all-time high of $2,801.80. Global risk off? It is hazardous to assume causation on elections, but this bears some consideration. Gold was due for a retracement anyway.

     Diesel is off 3 cents per gallon, without changing the overall pattern yet.

     The world is already trying to adjust to a new Trump era. It is certain that a few world leaders are re-assessing their approach to the U.S. This may provide some factors capable of moving wheat prices.

     The trend in wheat is still flat, but the re-set of global traders assumptions, currencies, trade relations, etc is about to begin. This may provide some direction to the wheat market.

     Its going to be interesting for a while, with new grist for the market information mill.

Stay tuned!

Market Bullets Tuesday November 5, 2024: Pre-Dawn

     `Have you been suffering from EDS (Election Distraction Syndrome)? It’s about to be over, except for the crying and gnashing of teeth. It is not likely to impact the wheat market much (absent apocalypse, of course).

     The only solid sure thing post-election is uncertainty that will decline over time as decisions are made and implemented.  

     The Fed is going to be announcing their rate decision in the days following the closing of the polls.  

     Wheat crop condition for PNW states: WA 50% Good to Excellent (GEx) versus 56% Last Year, OR 63% vs 37% LY, ID 43% vs 73% LY.

     The drought is still present in HRW country, although this week may have helped some. As of the week just ended, TX is 24% GEx vs 44% LY, OK is 31% vs 49% LY, Nebraska is at 51% LY.

     National progress is 41% GEx vs 50% LY. This week’s GEx is 3% better than last week.

     Ukraine has shipped 7.9 million metric tonnes of wheat year-to-date. Their overall grain shipments have nearly reached 14.7 million tonnes, about 33% ahead of last year-to-date.

     In their first open tender session since last August, Egypt bought 290,000 metric tonnes of wheat, 120k from Ukraine, 120k from Romania and 50 from Bulgaria, all FOB and all on a delayed payment authorization. Russia offered but was not accepted.

     The market is not short of wheat for sale.

The U.S. Dollar Index reflected an October net 3.49% increase in global aggregate Dollar value versus a basket of other currencies, with the exception of the Chinese Yuan, which is not included in the Index calculation.

     The Russian Ruble versus U.S. Dollars, in a weakening trend for the last 4 months, is trading at levels last seen in October of 2023. This makes their wheat cheaper.  

     Paris Milling Wheat futures were down Monday, cracking below the previously buyer-defended price level and “neckline” for a head and shoulders negative pattern that projects downward to a test of the late August lows, some 10 Eurodollars below Monday’s closing price. The Paris market is sensitive to Black Sea wheat prices and increasing influential for U.S. pricing.  

     The charts are showing a flat pattern that will break up or down soon. There is no signal at present, but the shading is slightly negative. This by itself is not enough to change a marketing plan. Wait until you can see their eyes.

It’s a trackable world. Let’s track it!

Market Bullets Monday November 4, 2024: Pre-Dawn

     Türkiye’s overall production of grain for marketing year (MY) 2024/25 is forecast to drop year-over-year due to drier-than-normal weather conditions across most of the country. Despite wheat production falling year-over-year by almost 2.0 million metric tons (MMT), Türkiye still has heavy inventories of wheat that it is trying to liquidate.

     Widespread heavy precipitation totals are expected in the next week from Texas to the Great Lakes of 1 to up to 7 inches expected and heavier total in the south.

     Accumulated exports of all U.S. wheat so far in the 2024/25 crop year has totaled 9.3 million metric tonnes, up 36% from the same period last crop-year.

     China is indicating interest in Australian wheat offers for the first time in many months.

     The U.S. Dollar Index is showing a strong upward move that has repudiated the slight decline over the last week. Early Monday the Index was back up to week-ago levels, which is just below the highest point since July. The movement of the Index is moderately correlated with wheat prices, but there are many other factors that are more directly influential on the price of wheat.

     Very early Monday’s wheat trade shows a market wandering back and forth without vigor. Chicago was up 3½ but 5 cents below the earlier highs. KC up 2 and Minneapolis up 1 ¼ in December, but down 6-7 cents in deferred contracts for July through December 2025.  

The Russian Ruble is at its weakest point since the summer of 2023, against both the U.S. Dollar and against the Chinese Yuan; Perhaps a sign of economic stress.

Diesel is rising rapidly, though it has not broken out of recent trading ranges.

     There is not much of a trend, as the market has been unable to find a rationale for higher prices. The trade is well aware of Russian/Ukrainian moisture shortages, as well as French struggles with too much moisture. The southern hemisphere has no extreme wheat production problems as their harvest season looms. In this kind of price environment, the range between highs and lows can be 50 to 75 cents. Marketers of cash wheat are not best served by trying to capture all of that range, but opportunistic work can bump the net just by paying attention to breakouts.

    There are tools that help with weak or indecisive price markets. Call your merchandiser and ask about price enhancing contracts.

This stuff is trackable…if you can stay awake long enough! Let’s track it.  

Market Bullets Friday November 1, 2024: Weekly Close

Wheat markets worked hard all week but saw only small price movement. Net for the week ending November 1, 2024:

     For the last 3 trading sessions in Chicago Soft Red Winter (SRW) wheat, the lows of each day has been within a ¾-cent range. Which just so happens to be around $5.64, the neckline of the 42-session “head and shoulders” pattern in December wheat, AND the center of a price skirmish line reaching back to mid-July, AND is within a dime of both 22-week and 86-week geometric mean lines. There are probably more technical convergences, but those will do to go on with. This is an inflection point that is suitable upon which to build a longer-term price move…the problem of the day is to discern whether that turns out to be upward or downward. The practical approach is to choose “tripwire” prices on either side of this fair value zone that will “prove” that something is changing with enough force to move the herd  out of its now-familiar range. If the herd moves north, we will be conservative with sales. If south, we will be aggressive. It is beneficial to know what that fundamental “something” is, so we can gauge its potential intensity and duration, along with any changes, but in the absence of this information, we must still act on the trend via chart patterns until we know what its motivators are. If game becomes scarce at lower elevations due to drought, the cougars will follow the creek (and the herd) toward the mountains in search of better hunting. So shall we.

Take-aways:

     The wheat price is in a narrow, sideways range.

     There are no currently dominant fundamental factors strong enough to move prices out of the range.

     The easiest way to become aware of the emergence of a dominant fundamental force is with alerts based on the penetration of specific price levels on the charts.

     We may not be able to fully identify the fundamental changes in a timely way.

     We can expect that the prices will move before the factors are widely understood, thus we can use the charts to initiate actions to manage risk exposure and profitability, and then refine positions according to factors as they emerge.

More commentary Sunday PM  (sent Saturday, Nov 2, 2024 @ PM 5:00 PM)

Market Bullets Friday November 1, 2024: Pre-Dawn

     The wheat complex has been seeking a mandate for several weeks, moving very slowly downward from the highs of the first week of October.  The Chicago December contract has retraced all but the last 2 cents of a 61% retracement from those highs and is sitting uneasily on several significant technical support lines; the 60-day simple moving average (Box-o-Rox), the 86-week geometric mean line from last March, the 22-week mean line from October highs, and the neck line of a moderate head and shoulders top pattern. This confluence of lines and indicators of central tendency is a sensitive spot on the price charts, influencing the perspective of many traders and systems. Eventually the market will find a reason to move, but for now there is no momentum.

     Friday very early AM trade has Chicago up 3 cents, about 3 cents off of earlier highs. There are stable export sales being reported, Russia is still dry with scattered moisture in their forecast, and the southern hemisphere wheat crop is developing nicely. A large proportion of U.S. winter wheat areas have a good chance of moisture in the next 6-10 days.

     The beat goes on. Stay tuned for developments when they come.

Market Bullets Wednesday October 30, 2024: Pre-Dawn

     It is tempting to pull back on a planned marketing sale triggered by the market dropping through multiple technical markers, as Chicago December wheat contracts did on Tuesday, but there is nearly no market incentive to rally more than a nominal amount from present levels (right on top of the 60-day simple moving average and the “neckline” of our little Head and Shoulders negative reversal pattern). There are no systematic guarantees that wheat will not rally. It’s just that there has to be some better basis for a rally than a surprise government report showing winter wheat condition heading into November is not as good as many had expected. We still are sitting on quite a bit of wheat and expect to lay it off incrementally (and hopefully opportunistically) through the fall and winter months. Lay it off we will.

     Maybe the election and aftermath will yield some market-moving information, positive or negative. Meanwhile, the circus is nearing the end of Act I. It ain’t over yet, folks!

     Looking into the Palantir (crystal ball, for non-LOTR folks), it is murky. Russia’s attempt to commandeer a big chunk of the northern hemisphere wheat market is certainly not designed to assist us in selling wheat at a good price. China is distracted by the same program, for which they have pledged some support through the BRICS agreements (Brazil, Russia, India, China, and South Africa), under which a new international grain exchange operated for the benefit of members only is planned. Unless the wheat growing weather in Russia is seriously dry clear into spring, or there are diplomatic surprises to be observed after the election, or some other black-swan style  event, the price of wheat seems headed for a prolonged period of range-bound behavior. That can be interesting, but also exhausting for wheat marketers.

     The wheat price trendline is still under review, but the board is not all green. There are definite warning lights flashing. The positive bias that we had so ardently cheered in recent weeks is damaged. This is the reason for incremental sales.

Stay tuned.      

PS: gold is sniffing at new highs again.   

Market Bullets Monday October 28, 2024: Pre-Dawn

     Russia is wasting no time advancing a new wheat marketing program intended to set prices for sale to end users directly, in what amounts to an historical shift in global marketing patterns. Traditionally, grain origination companies whose daily business involves aggregation of grain ownership that is marketed to end-users, make competitive tender offers of grain originated from many sources upon request by importers, who then choose among these offers (or not). The system is price-transparent and competitive, not controlled by any one entity. It appears that the new, closed-end program with Russia, the largest exporter of wheat in the world, is expected to eliminate intermediary companies from export/import transactions with Russia, giving Russian entities a dominant position of price-making instead of price-taking, a form of cartel. The initial effect on wheat prices is likely to be positive to some extent, as the recent months of wheat sales have been done at a discount to known prices from the tender offer approach. As time passes, one expectation is that countries beneficial to Russia’s regime may receive more favorable terms than others. The success of this developing global grain movement regime will have an important effect on global wheat prices.

     Russian’s Grain Exporters Union has published a menu of export prices for Russian wheat indicating 12.5% protein FOB Black Sea at $240 per metric tonne for October, $245 for November and $250 for December.

     Net [U.S. wheat] sales for the period ended October 17 of 532,900 metric tons (MT) for 2024/2025 were 6% above the previous week. Crop-year-to-date total wheat export sales are running about 19% above the pace required to reach the most recent USDA whole year projection.    

     Argentina’s Rosario Grain Exchange estimates Argentine wheat exports at 13.3 million metric tonnes this year, a near-record and about 1 million metric tonnes above their 5-year average. Argentina is the world’s 5th largest exporter of wheat behind Australia, the U.S., Canada and Russia, in order.

     Sunday evening’s wheat trade saw Chicago December contracts down 8 cents to $5.61 within the first 30 minues. By 4:40 AM, the contract had climbed back to plus-1 cent on a steady increase. Kansas City Hard Red Winter (HRW) was also unchanged, while Minneapolis Hard Red Spring (HRS) was down 1½ in a very narrow range. The recent challenge of key supportive price levels continues without breakout (generally, a closing price is considered a more decisive failure of support, often avoiding whipsaw effects from standing orders at too-precise price points). The beat goes on. Monday’s close will tell the tale.

     The market is riding very close to well-known sensitive prices that might trigger a rush of volume. There is no efficient way to anticipate a move up and away or down and out. Alert patience is the trend-followers way.

Stay tuned.

PS: Diesel is back down to lows dating to October 1.

Market Bullets Friday October 25, 2024: Pre-Dawn

     Russia is proposing a new international grain exchange among the BRICS countries. The plan released in this week’s summit would take several years to get put into place. Reuters article <here>

      Weekly Export Sales data for the week just ended showed export bookings for wheat of 532,885 metric tonnes, a 5.7% increase over last week and in the top 25% of the trade estimates of 350,000 to 650,000 tonnes. 

     Wheat futures trading pattern is sideways, trading this week within the same range as the week of September 13 for Chicago Soft Red Winter (SRW). As of 3:30 AM Pacific Time, KC was down 9 and Minneapolis Hard Red Spring (HRS) was down 5 cents. The overall pattern is without strong bias in either direction, but there is clear downside potential on the charts, especially if the low side of the 7-week-old sideways range is broken ($5.60+- in Chicago December futures).

     The wheat market is in back seat mode to corn and soybeans, and without impulsive data, the money funds are being cagey and cautious, but they would jump on a technical break either direction in wheat. The call is steady, until it’s not…

     Stay with us, there will be more interesting developments soon.   

Market Bullets Thursday October 24, 2024: Pre-Dawn

     The trade is expecting a range of 350,000 to 650,000 metric tonnes of old-crop 2024/25 sales and 0 to 50,000 tonnes in 2025/26 sales in Thursday’s guvmint report. 

     Week-to-date Beans up 34 on export sales and corn up 17 cents on positive ethanol stats.

     Wheat is being supported on dry conditions in U.S. plains (forecasts improving) and Russian drought (forecasts steady – still dry). Australia and Argentina both seeing better moisture for wheat.

     Kazakhstan is expecting to export 7 to 7.5 million metric tonnes of wheat this crop-year, slightly below a 5-year average of roughly 8 million tonnes per year.  Kazakhstan’s relationship with Russia is close, but the Kazakh regime is authoritarian in nature, independent of Russian domination.

      At a current summit gathering between Brazil, Russia, India, China, and South Africa (BRICS), led by China and Russia, work continues on assembling a global economic system alternative to the U.S. Dollar. There are significant hurdles to overcome to achieve this, but there is increasing interest, especially from many authoritarian states around the globe. Among the changes proposed by Russia is the elimination of open market tenders for wheat import purchases, a significant threat to the price-transparent tradition that supports competitive wheat movement in global markets at present.    

     Wheat prices in Chicago Soft Red Winter (SRW) wheat in very early trade Thursday morning were sliding out of unchanged to slightly negative as of about 4:00 AM Pacific time. The ability of the wheat market to hold within a narrow sideways range just above some very sensitive price levels is the testament of a market that has no mandate. It may be that the looming U.S. presidential election is causing some delays in financial or trading decisions. The trendline that has given producers some hope of better prices ahead is under pressure. The longer this channel is sustained, the more valid the pattern becomes for discerning the next leg of the price journey. A break below $5.60-$5.64 for December SRW futures is the low side, likely to trigger money fund selling. A move above the $5.96 level is the first step toward a new upward leg, maybe inspiring short-covering.

     This is a test of patience for marketers and traders alike.

     Stay on plan. No need to go to DEFCON 3 just yet.

Market Bullets Wednesday October 23, 2024: Pre-Dawn

     Private Russia-based analyst SovEcon has released its first forecast for the 2025 Russian wheat crop, estimating production at 80.1 million metric tons (MMT), down from 81.5 MMT the previous year and below the average of 88.1 MMT.  Wheat crop could decline to the lowest level in four years amid adverse weather in major winter wheat growing regions. This factor is potentially a major price mover if the region continues in drought conditions. 

     The trend of slow and fitful escalation of wars in Ukraine/Russia and the Middle East has not changed. There is little current effect on global wheat prices, but the economic effects of these conflicts is bound to be negative.  

     Interest rates are in a long-term rising pattern, with increasing costs of debt service an expanding drag on North American interests, including the cost of farm inputs. The cost of unsold wheat storage is rising, both direct and indirect (per bushel costs and opportunity costs). The higher rates are a reflection of rising risks in ownership of fixed income paper, traditionally considered a “safe haven” in volatile periods, but now less so.  

     Australian wheat crop estimates are still expanding.

     The trendline in wheat is tentative and cannot be defined as reliably positive. Forward quotes for wheat deliveries into new crop 2025 are showing up and should not be ignored. At present there is no specific sell signal for wheat, as the technical support levels back to the August lows are still intact, but there is clearly a downside risk at present prices that could be triggered by a failure to hold at present prices above $5.60 (Using Chicago SRW as bellwether).

     This is a reasonable time to increase attention to global markets.

     Two representative items that have exhibited noticeable behaviors in the recent week(s) are December Gold futures and Home Depot stock. These two are irrelevant to wheat prices, but the background psych of the market is sometimes illustrated by individual things.

     Stay tuned. We will investigate anything and everything in an attempt to discern effects on the wheat price and on our business.   

Market Bullets Tuesday October 22, 2024: Pre-Dawn

     The U.S. dollar index is up 1.8% Month-to-Date, rising from a challenge of a technical support price zone that is almost 2 years old. Based on the index (which excludes the Chinese Yuan from its composition), the U.S. Dollar is the strongest it has been since the first week of last August. If the Fed does not lower interest rates, this short-term trend is likely to continue. In terms of the Chinese currency, the very short-term pattern is of dollar strength versus the Yuan, currently trading at 7.129 Yuan per dollar, up from a recent 6.97 Yuan level in September.

     For wheat, currencies play an indirect role in pricing, as foreign buyers must first buy dollars to pay for purchased wheat, hence a strong dollar is a price-negative factor.

     Winter wheat planting and emergence is either on or ahead of schedule in the PNW. National planting and emergence are 3-4% behind the five-year average.

     Another tidbit-detail about the latest Russian chess move in their attempt to garner control of a large segment of the global wheat market: Non-Russian bidders for Russian wheat going into international tenders must have long-term origination agreements with designated Russian companies to receive any wheat. This is causing some anxiety among the large, old-school grain merchandising companies that have dominated global trade. For the rest of us, the concern is loss of transparency of price and a possible trend among autocratic states toward similar types of oligarchic contracting.

     Food and energy in the hands of a dictator are much better weapons than nuclear missiles.

     Outside of improving moisture conditions in Argentina and Brazil, along with moderating forecasts in Russian dry areas, there are nearly no headlines directly associated with wheat markets. Corn is up about 10 cents from recent $4.00 lows a week ago, which was itself a new, higher low, the beginning of a new uptrend pattern. Beans are not as perky, but also working on a new, higher low also. One classic signature of an uptrend is a series of higher highs and higher lows.  

     The wheat market is grinding hard on technical support price zones, with Chicago trading early Tuesday morning right on top of the sensitive levels that have revealed buyer interest each time the market reached down over the last month and a half. There is bound to be risk management anxiety among traders and a potential trigger for the money funds to unleash more selling if those levels fail. Chicago’s support is between $5.60 and $5.64, which turns out to be a “neckline’ in a negative “Head and Shoulders” pattern that measures down to the late August lows around $5.20, about 50 cents of negative exposure.  This bears watching (no pun).

Stay tuned.  

PS - Home Depot (HD) a long term, very rewarding stock to own, dropped $8.60 per share on Monday. this is not a massive decline, but it comes only four days after putting in a new all-time high at $421.56. A 2% drop is noticeable, and because it is a profoundly fundamental business, could presage a market correction. Just sayin’.

Market Bullets Monday October 21, 2024: Pre-Dawn

     In keeping with an October 11 resolution by the Russian Grain Exporters Union, a list of “Approved” buyers was posted. Explicitly mentioned were Egypt, Tunisia, Algeria, Morocco, Jordan, Saudi Arabia, Bangladesh, Qatar, Kuwait, South Korea, Pakistan, India and Iraq. The intention is to lock in these buyers and make grain transactions direct and private, without public disclosure of prices or terms. The traditional open market system of open tender announcements, followed by announcement and selection of competing offers, would be eliminated for these major companies. The first apparent goal is to stop the discounting of Russian grain in global markets that has occurred due to international sanctions on banking transfers and embargoes on transactions with Russia due to its illegal invasion of Ukraine. The second is expansion of influence on the grain markets in general. The impact on wheat prices in the U.S. or other major wheat export sources is not likely to be dramatic in the short run, but if successful, will be a challenge to global wheat sellers.

     For the last 28 months or so, global wheat prices have seen prices decline, as Russian wheat has been the low price point. The Russian Grain Union resolution is not going to make a powerful influence right away, as open global pricing systems and trading exchanges will still be the price discovery of choice, for obvious reasons, but the attempt to corner wheat demand markets within Russia’s long reach is a factor that will be closely watched.

     Trading in the early morning hours of Monday, October 21 saw Chicago up 2-4 cents, KC 3-5 cents higher, and Minneapolis Spring wheat up 1-3. The next few sessions will be watched closely by the trade, as the price range currently being traded is very near key previous supportive levels. A failure to hold above the nominal $5.64 price, about a dime below present trade) would be likely to trigger some sell stops (standing orders to sell if a certain price is reached). If the range holds, the first step toward creation of a base for another upward leg will be established.

The trendline is still positive, if hanging on by only a few cents.

     The behavior of the wheat markets for the balance of this calendar year is likely to be choppy and frustrating, although there will be opportunities along the way for marketers of wheat. Speculative trade is bound to be especially hard work in this environment (not that it isn’t in any environment). If the plan is for incremental sales, the best we can to is track the directional patterns and underlying factors as closely as possible.

This stuff is trackable. Let’s track it!

Market Bullets Friday October 18, 2024: Weekly Close

     Chicago Dec closed 3 cents above the 60-day moving average. The small price support formation of multiple session lows has taken some damage, with the Friday settlement taking us back to September 20. For the week, Chicago was down 26 cents including Friday’s minus 16 cent move. KC Hard Red Winter was down 23, while Minnepolis Hard Red Spring (HRS) was off 31. None of the wheat charts put out a sell-signal, but Monday will be a critical day of “Go/No Go” for many traders.  

     It looks like the funds are re-building short-sold positions in Chicago , now at -26,013 contracts, having more than doubled their net shorts since October 4, even with a small reduction this week. This is still not a heavy position, but when the herd turns south, we have to take note.

     The trendline is still positive (sort-of), but the wheat price environment is not in great health. It takes money and buying intent among a large number of traders to sustain a continued upward move outside of an established trading range like the one between Sep 9th and the present. Most of those traders were wary of buying into the top of the range without something better than a hunch, especially if you have to explain it to the boss. On the marketing side, the market is close to our established sell-exit triggers.

     If I asked you to explain why you are sitting on a significant portion of your annual crop in storage, could you provide two good reasons? Tax doesn’t count here. And then, “What is the maximum loss you are prepared to sustain if the market does go downward from here?” The answers to these questions are yours. All you have to do is beat the “Box-o-Rox”, that is sell incrementally every month on a schedule unless the market is above the 60-day. As long as the market is above that average, then suspend all sales until it crosses back below. This is not a recipe for getting rich, but it will help the average annual sale be above the average whole-year price. It’s called the “Box-o-Rox” because its dumb as a box of rocks. It is correct and appropriate to improve this simple little system with rules developed based on experience, but there must be rules. Mostly it’s just a marker by which to measure your marketing system’s performance.

     U.S. wheat export sales for the week just ended were positive, just under the high end of pre-report guesses.

     The weather problems that had been keeping the market up have been reduced but by no means eliminated. The global wheat region dry weather story will still be a primary driver for some time yet.

More later. Stay tuned.

Market Bullets Friday October 18, 2024: Pre-Dawn

     The Chicago Mercantile Exchange (CME) has launched a new wheat spread series, now including Chicago wheat futures vs. European Milling Wheat (Paris). It’s U.S. Dollar denominated, and cash settled through one clearing house.  For traders, this is a way to eliminate complex trade placement, settlement issues and to cut costs. For marketers trying to be aware of global effects of Euro-zone wheat production and sales it is a valid trend-following tool.

     Moisture is improving Argentine, Australian and U.S. wheat growing conditions. Some of the Russian areas that had needed rain are still waiting for rain, bearing in mind that the area of concern is very wide and deep, not likely to see uniform conditions. In general, global wheat trading prices are calculating less weather risk than they were a week ago. The fact that U.S. markets are still steady is a mildly positive indicator, although there is little fundamentally to sustain upward momentum.  

     Chicago SRW wheat futures market, traditionally the global wheat price bellwether, is holding onto a slow rising pattern without much sizzle. Very early Friday morning trading had December delivery contracts at steady to positive levels, now about 15 cents above the first negative warning line of $5.75 (the lows of Wednesday and Thursday this week). Trading below this little “tripwire’ would suggest that a further decline to previous lows 10-15 cents below that is increasing in probability. One the upward side, the challenge is $6.17, about 27 cents higher than Friday mornings action. The 60-day simple moving average is at $5.70 in Chicago December contracts, about 18-19 cents below current trade.

     The only market that is doing anything of note is presently gold, printing a new all-time high at $2,729.30 per Troy ounce in the December contract just before midnight Thursday heading into Friday morning.  The factors most prominent for the present dramatic rise in gold are geopolitical tensions, a falling interest rate environment and economic stresses in China. The kind of money involved in running gold up by $1,000 per ounce in the last 2 years is not just retail jewelry makers. It takes lots of buying energy to accomplish such a move. At least some of the power seems to be coming from central banks. Inflation is also a factor.

     Wheat is still OK. The market is quiet, which tends to magnify whatever news does emerge.  Stay on plan, make the incremental sales if necessary, but the Box-o-Rox average is still posting a “hold” signal. The risk is clearly about 20-40 cents lower, without really changing the market overall direction.

Stay tuned.

Market Bullets Thursday October 17, 2024: Pre-Dawn

Big brush ideas to analyze by:

     Food and energy are the weapons of the future. People will do anything for food and heat. He who controls food and energy controls the world. Data is the means by which food and energy are managed.

     The data of the world is written on an infinite blackboard covered with the variables of a formula. The solution, way down in the lower right corner of the board, yields the coordinates of supply and demand…together identifying the price, satisfying the greatest number of transactions leading to efficient distribution. Prices move in time making an historical trend, which allows the calculation of probability, in turn allowing decision making.  

     Awareness of trends is essential to survival and growth.  Making decisions in the absence of knowledge of the trends is gambling.

     Wheat is on that blackboard.

     Very early trade on Thursday morning showed Chicago SRW unchanged, Minneapolis HRS plus-4, KC HRW plus-2 and Paris Milling Wheat up the equivalent of about 3 cents per bushel. The wheat market complex knows exactly where it is and sees no reason to get excited. Active global trade is continuing without having to bid up, witnessed by a few national tenders resulting in a “pass for later re-issue”.  The dry weather that had kept the buyer’s sails filled has moderated in some key wheat areas in the southern hemisphere and in wide zones of Russia. The Chinese have been focused on corn and soybeans, as prices for the grains have been at or near long-term lows.

     Wheat is floating just above an important price point that has been a skirmish line between buyers and sellers since early September. If this price inflection point continues to function, the next leg upward may launch from there ($5.60 to $5.75 Chicago December contract).  The top end of the recent range is $6.11 to $6.17, about 25-30 cents above present trading. The mildly positive trendline remains intact, but there is little momentum. It is a standoff until one of the tripwires is activated.

     It's trackable, if you can stay awake.

Market Bullets Tuesday October 15, 2024: Pre-Dawn

Very early AM wheat trading in all three major U.S. futures markets is 3-6 cents lower in December contracts, putting pressure on the low side of recent trading ranges. The driving factors are various, with improving weather the most negative, and Russian military movements the most positive.   

     ISW October 14, 2024: Russian forces struck civilian vessels docked at Ukrainian ports for the fourth time since October 5, part of an apparent Russian strike campaign targeting port areas to undermine Ukraine's grain corridor, spoil international support for Ukraine, and push Ukraine into premature negotiations.  

     Saudi Arabia’s General Food Security Authority (GFSA) is making moves toward a system of wheat import purchases that are not in the traditional tender pattern. Similar in effect to what the Russians are discussing, the Saudi program involves buying wheat through Saudi-owned grain origination agencies outside of the country and reduces the transparency of import wheat pricing. Although this is a vastly smaller program than the Russian concept of “direct” buying, the trend is toward a less market-wide, open pricing market organization. By the recent purchase of 13.2 million bushels of wheat, Saudi purchases have accumulated out to deliveries in January-March of 2025, implying that they will likely be less aggressive buyers in the near future.

     APK Inform (A Ukraine-based publication): As of October 1 this year, agricultural enterprises of the Russian Federation had 37 mln tonnes of grain in stock, which is 14.5% less than on the same date a year earlier. This is evidenced by the data of Rosstat (the Russian Federal State Statistics Service) .
At the same time, as of the reporting date, wheat stocks in these formations decreased by 17.4% year-on-year to 24.42 mln tonnes.  

     A bit of rain is in the nearby forecasts for some dry areas in the U.S. plains and in Argentina,  softening the edge of the bullish wheat weather price driver.

     All of the above are vague and, with the exception of the attacks on Ukrainian export programs, cannot be taken to be grossly price-moving items, but the background of the traditional global wheat pricing and distribution system is shifting.  Further developments are worthy of tracking.

     As indicated by Chicago wheat futures, the short-term momentum is negative, and a challenge of the lower boundaries of the upward-tilted price range is underway. Chicago is now less than 12 cents above the 60-day, “Box-o-Rox” trend indicator, a crude indicator of trend that may be applied to wheat marketing programs. This simple guide for incremental sales can be better over time than the random, “bin as checkbook” approaches to selling wheat. Call for details. The trend channel is still upward, but it is reasonable to keep track, as the market enters the northern hemisphere winter seasonal period where demand rules.

This stuff is trackable. Let’s track it!   

Market Bullets Monday October 14, 2024: Pre-Dawn

     Russia is indicating they will begin to apply brakes to their export program with increased taxes and quota adjustments, although they still need to accept below-market bids to finish their marketing year. The most recent announcement is of plans to increase its regular wheat export duty by 41% to become effective this Wednesday.

     Private crop analyst SovEcon is posting another 1.5 million tonnes lower Russian wheat harvest, now 81.5 million metric tonnes (-1.8%).

     Southern hemisphere wheat crops are closing in on healthy yields that will make them global export competitive.

     Just after midnight Chicago December contracts were trading within a penny of the closing price of September 13th, which was at that time 74 cents above the seasonal low in the last week of August. The market has not accomplished any serious gains since then, although there is a very gentle upward trend in higher highs and higher lows (the signature of most uptrends). The trading range has been narrowing, with lower volatility numbers causing option prices to wither slowly. There is a high boundary at about $6.17 and a low edge at about $5.84. These “tripwires” can be used as marketing alarms, the higher one for suspending incremental sales and the lower for triggering them. Meanwhile, there is no signal. The market is quiet. This is the kind of pattern we should expect for the next several months. The important thing is to stay on plan. There is still potential downside in prices.

     Big corn and bean crops, both northern and southern hemispheres. There is enough wheat to feed global markets. Good marketing does not have to be heroic, just thoughtful and thorough.

Stay tuned. The market will always give us opportunities.

Market Bullets Friday October 11, 2024: Close

October 11, 2024 WASDE:

     U.S. domestic ending stocks: 812 million bushels versus pre-report guesses averaging 821 million. Mild price positive.

     Global ending stocks: 257.7 million metric tonnes versus pre-report guess average 265 million. Mild price positive, although the new figure is a slight increase in global supplies Year over Year (YOY).

     The outlook for 2024/25 U.S. domestic wheat this month is for reduced supplies, larger domestic use, unchanged exports, and lower ending stocks. The global wheat outlook for 2024/25 is for reduced supplies, consumption, and trade but slightly higher ending stocks.

     Russia’s Ministry of Agriculture (Minselkhoz) held a meeting with Russian Union of Grain Exporters (RusGrain) on Friday October 11 and supported a push for direct export sales, “bypassing traders and intermediaries from other countries,” according to the Rusgrain Union. The general idea is apparently to favor “friendlies” and increase Russian influence over global wheat markets in general. One prominent feature of this policy is to decrease transparency of wheat prices. The policy is being portrayed as beneficial to “Consumers” by cutting out the middlemen, ultimately putting much greater pricing and political power in the hands of the Kremlin.

     Corn (-2)  and soybean (-10)  futures were both slightly lower at Friday’s close.

     CFTC Commitment of Traders (COT) report shows large spec traders have increased their net short-sold position in Chicago to about double what they were last week (now -13,498 contracts). Large specs in KC Hard Red Winter (HRW) have built up a net long of +4,910 contracts, the most on the long-bought side since August of 2023 and a change from a -3.839 net short last week.

     The wheat complex remains positive and has not pulled back from a challenge at the 38.2% ratio level, even though there are few strong fundamentals that demand rationing global wheat supplies via price. There is no sell signal on the charts, leaving marketers with an intact 2-month-old uptrend that lacks momentum. The challenge is honoring the uptrend line by holding off of incremental sales while knowing that at least half of the recent gains are vulnerable to a pullback (about 40 cents potential, which could translate to roughly 20 cents for PNW white wheat). The nice thing about incremental selling is that we can miss the breakout highs by selling the top of the recent range while still benefiting from the unsold balance. If it is bothering you, sell a nibble, then be able to cheer anyway if the market goes up.

Otherwise hold tough!

Stay tuned, there is always more.   

Market Bullets Friday October 11, 2024: Pre-Dawn

     The Russians have elevated their attacks on Ukrainian Black Sea grain export facilities and shipping, including private vessels. The most recent was this week, where six people died and eight were hurt. A series of ballistic missiles in at least 3 attacks have been used to discourage grain shippers from moving Ukrainian grain.   

     The WASDE report to be released on Friday morning at 9:00 AM Pacific will dominate the trades attention, but the intention of the market will be once again revealed shortly after the report is absorbed.

     A more detailed MarketBullets commentary will be posted Friday before 1:00 PM.

Stay loose, stay alert…agile, mobile and hostile! …as the coach used to say.   

Market Bullets Thursday October 10, 2024: Pre-Dawn

     The October USDA World Ag Supply/Demand Estimates (WASDE) report will be released Friday, October 11 at 9:00 AM Pacific Time and 11:00 am Central.

     Due to an accelerated purchasing program that began in September, Egyptian Prime Minister Mostafa Madbouly reported Wednesday that Egypt has enough wheat reserves for more than 5 1/2 months.

     Pre-WASDE report trade guesses for Friday’s monthly WASDE report show expectations for US ending stocks to be 821 million bushels versus 828 million bushels last month. World stocks are expected to be reported at 265.0 million metric tonnes versus 265.3 million tonnes last month. 

     Russian lack of moisture for planting and emergence remains a leading market factor, although there is potentially some relief in their 6–10-day forecast. Black Sea prices for wheat into Southeast Asia are reported to have increased in recent weeks from CIF $265 per metric tonne to about $280.  

     Israeli airstrikes have killed two more possible successors to Hezbollah, the primary proxy force in the region for Iran, according to Israeli Prime Minister Benjamin Netanyahu on Tuesday. Hezbollah  is said to be speaking of potential ceasefire talks.

     Russian mechanized units are reported to be accelerating their movements to try to gain some ground before the mud season makes movements across open fields difficult.

     The wheat price on Thursday early morning trade based on Chicago December futures is still rising, up about 8 cents. KC December contracts were also up about 8 cents, while Minneapolis Hard Red Spring (HRS) was lagging, up 3½ cents. The trendline is positive, now trading in Chicago about 39 cents above its 60-day simple moving average.

Since the last day of 2023, Chicago front-month contracts are down 21 cents, quite a lot of sweat and hard work to come such a short price distance!

     Thursday will be the pre-report positioning day ahead of the WASDE report Friday morning but will likely be dominated by corn and soybean attention, as harvest is beginning to pick up momentum in those crops.

Stay on this channel for further developments.

Market Bullets Wednesday October 9, 2024: Pre-Dawn

     Paris Milling wheat, the best indicator of Black Sea regional wheat values in the absence of transparency from Russia, is staying on its rising 31-day mean line from August 26th. The U.S. wheat markets are positive, although without a fundamental mandate, leaving the price vulnerable to technical volatility. The net positions held by the large speculative funds are broadly smaller, as capital has moved toward other commodities that have a greater profitable motivation, e.g. corn and soybeans.  

     In early Wednesday trade, PNW white wheat at $6.00 is near parity with Chicago at $6.00 per bushel around midnight Pacific Time Wednesday morning.

     This wheat market is moving upward, still below last week’s high in Chicago at $6.17, with a tech target at $6.41. There is no well-lit path, but a trend does not always explain itself. The patience required to stay in during such periods is based on awareness of the wisdom of the market as a conglomerate of many perceptions and little else. No mandate means in either direction.

     The herd is moving north, so shall we. Stay tuned.

Market Bullets Tuesday October 8, 2024: Pre-Dawn

     Accumulated shipments of U.S. wheat over the last week brought the marketing-year-to-date total to 8.61 million metric tonnes (316.44 million bushels), which is 34.59% greater than the same period last year. +The market knows this number very well.

     As northern hemisphere harvest winds to a close, Russian wheat production estimates for the year have been shrinking. One of the factors that has until now been absent from calculations is the impact of war on Russian farming. The three most effected oblasts affected by Ukrainian incursion are Belgorod, Bryansk and Voronezh, together normally accounting for up to 9 million metric tonnes of wheat produced annually. The disruption, when added to weather related problems have reduced Russian projections (Washington, Oregon and Idaho together produce between 5 and 6 million metric tonnes annually).

     The 70+ cent per bushel rise in Chicago wheat prices since August 27 to the present was presaged by a net short-sold position of -32,681 contracts in the hands of the Large Speculative group of traders according to the Commodity Futures Trading Commission’s (CFTC) Commitment of Traders (COT) weekly reports of the period. The current net short position is -6,132, suggesting that 26,549 contracts of wheat have been “covered” or bought back in Chicago wheat futures over the last 29 trading sessions. This is a common phenomenon, but the latent buying energy represented by the large, short-sold position has been mostly exhausted. For the big trading funds to be motivated to continue to buy wheat, we need a more compelling fundamental setup. Continued incremental adjustments over time in wheat stats by various agencies is probably not enough to push the funds into the aggressive buying required to produce an extended upward trend.

Global import buyers are not feeling pressure to accelerate buying. Interest rates are re-gaining some upward momentum, making grain storage more expensive. The U.S. Dollar is strengthening (mild indirect U.S. wheat price negative influence), as the Russian Ruble is weakening (indirect Russian wheat price positive influence). Gold is quiet. Diesel has been pushing higher, but is pausing in the last 24-hours (not a wheat price factor, but a key operational input price).

     The wheat trend is upward, but there are significant technical hurdles. Chart price barriers are not walls in the sky, but they reveal repeated points at which the buyers and sellers have tested each other and are likely to clash again. The current market is just below an inflection point at the 38.2% retracement line which, unless it is penetrated with some vigor, may be enough to turn wheat prices back toward the negative side to test the old lows once again. This is the range trader’s dilemma; at the top of a known previous price range, it can be argued to sell the range-top, but the risk is to see a break-out to the upside that may sling-shot the price into the next target, 57 cents higher at the 61.8% line. For marketers, it is a point that requires recognition that the downside of at least 30 cents is at hand.

     If the price factors do not shift dramatically, range-trade is to be expected. Incremental sales, especially if cash is needed to cover expenses, are sensible at range tops, but the trend is still upward, and the main rule we live by is to hold as long as that is the defined pattern (above the 60-day moving average at least).

     A failure to hold above the $5.75-$5.60 range in December Chicago wheat futures would be a warning. The old multi-year low is $5.20+-. The upside target is first $6.40 (50% retracement) followed by $6.68 (61.8%).

     We will stick to the trend (“hide and watch” as Cousin Terry would say), but we will also have a slice of wheat planned for quick sale if the trip-lines are triggered.

Stay tuned.          

Market Bullets Monday October 7, 2024: Pre-Dawn

     USDA Small Grains Summary and Stocks reports marking the end of September and the 3rd calendar quarter were a wash. When USDA puts out a status quo set of numbers, it relieves the trade from having to adjust trading plans. The market proceeds to do what it was going to do anyway. In this case there was no big breakout either way.

     The Russian Ruble is trading at its weakest of the year. This is not a direct factor in wheat, except for the fact that it makes Russian wheat less expensive for China, Egypt, India, Turkey and Bangladesh. If Russian wheat rises in Dollar terms that does not necessarily translate into price increases to that group.

     The wheat chart has validated the “old-fashioned “resistance” levels at the 38.2% retracement ratio price once again. The bigger picture appears to be a “rounding bottom” on the daily chart of Chicago wheat. It is the kind of chart pattern that has the potential to awaken the money funds and trigger some capital entry. If the question at hand is, “Do we see a seasonal low in the rear view mirror?”, the answer to date is a conditional “Yes”.

     The next challenge (unless we encounter a significant failure of the upward pattern) is the 61.8% ratio target, now 82 cents above current price levels. It will take some new fundamental ideas entering the market to accomplish this, as in severe dryness in wide areas of wheat production, starting with the southern hemisphere and extending northward,  or a dramatic expansion in the middle eastern war – not on the radar screen today.      

     Diesel is still rising, now at levels last traded in the first week of September, right on top of the declining 593-day mean line reaching back to June of 2022, as it approaches the 38.2% ratio target. OPEC+ (Including Russia) is working on expanded production cuts intended to maintain prices. The trendline is shifting toward a positive slope.

     China’s “People’s National Day” holiday ends Monday with a full return to trading Tuesday.

     Russia’s “too dry to plant” weather is still a factor, but there is some rain in the 6-10 day forecast.

     This wheat market is still in a defined up-trend, even as we see a pullback from recent 3-month highs. The warning line of a failure in Chicago December wheat  contracts is roughly $5.60, about 25-30 cents below the after midnight trading levels on Monday morning.

Stay on this channel for the next chapter.  

Market Bullets Friday October 4, 2024: AM

     Chicago wheat has given back most of the gains of Tuesday and Wednesday, and just before the close Friday was trading at $5.88, 4 cents above Tuesday’s opening trade of the day session.

     PNW White wheat coast bids were steady Friday morning at $6.00 nearby, but the overall environment was not.

     Diesel is popping up along with crude oil due to the rising threat to Iranian oil production facilities from Israeli air attacks.

     Interest rates reflected by 2-year and longer treasury paper are rising, triggering a parallel rise in the U.S. Dollar Index.

     Gold is not printing any new highs.

More after the close. Stay tuned.

Market Bullets Thursday October 3, 2024: Pre-Dawn

     Wednesday very early trade showed wheat in a narrow range, within 3 cents of unchanged on either side. The news wires are concentrating on war.

     Paris Milling Wheat blew through its 38% upward retracement line on Wednesday like an Express Freight Running Late on a Hot Date. The December contract closed up €6.25 per metric tonne ($.19 per bushel), pushing the two-day total to €11.50/tonne ($.35/bushel). KC Hard Red Winter (HRW), a near match for protein, gained 21 cents on the day, with a two-day total of 33¾ cents, also breaking thru a retracement line, while Minneapolis Hard Red Spring (HRS) gained 14.

     Russia: They are delaying or seeding into dust in a large portion of Russian winter wheat country, now 600,000 hectares behind schedule in the Southern and Volga regions.

     There has been another drone hit on export facilities in Odesa, Ukraine. A grain loading facility was damaged.  

     Western Australia is also suffering from lack of moisture, reducing production estimates incrementally.

     Diesel is moving upward, but Wednesday’s trade closed well below its daily high.

     The Russian Ruble is trading lightly against the U.S. Dollar, but is at its weakest in a year. The Ruble’s relationship with the Chinese Yuan, now its official benchmark currency since June, is also at its weakest in 12 months. This is not yet at emergency levels, but it does make it more expensive to import war materials and weapons. Iran and China both have military and economic distractions of their own, so assistance to Putin is less prominent in the news. The effect on wheat prices of these factors is indirect, but probably a net positive.

     The trend in wheat prices is positive, with the world on a hair trigger. The perception of risk is rising in the world, with energy and food front of mind for many. Dry conditions in Russia and Balkan states is the short-term market driver. It is reasonable to be slow on the trigger for cash wheat sales. Chicago is 47 cents above the 60-day, Box-o-Rox simple moving average.

     Stay tuned to this channel. If things change we will see it in the charts early.

     Stay tuned to this channel. If things change we will see it in the charts early.

Market Bullets Tuesday October 1, 2024: Close

     Wheat futures in Chicago are following the path to challenging the previous high of $5.98¾ on September 13th to set up an attempt to overcome the Fibonacci ratio 38.2% target at $6.11 on daily charts. Immediately after that, there is one more old high hurdle that looms at $6.15 from the first week of July. The trade is well aware of this thicket of old fashioned “resistance” levels. It is the kind of chart pattern that has the potential to awaken the money funds and trigger some capital entry.    

     U.S. Dollar Index is stabilizing above the key support price zone which has consistently shown sufficient buyer interest each time it has been tested by the market over the last 22 months. Since this index is skewed toward European currency sensitivity, the war(s) in Ukraine and around Israel are more of an issue. In an environment that is threatening to destabilize large portions of the eastern hemisphere, the U.S. Dollar remains the most socio-political currency. A failure of the Greenback to hold its index above this price zone would be a significant development, affecting global trade and pricing, and making its tracking useful.

     Diesel is still rising, now at levels last traded in the first week of September, right on top of the declining 593-day mean line reaching back to June of 2022, as it approaches the 38.2% ratio target.

     Interest rates are steady.

     Stay cool. Trade with the trend.

Market Bullets Tuesday October 1, 2024: Close

     Chicago December delivery contracts posted the highest since July 11. Closing settlement was the highest close since July 5th. Chicago is now at the challenge level that requires a significant close above $6.15 to confirm.

     KC Hard Red Winter (HRW) gained 12.

     Minneapolis Hard Red Spring (HRS) up 13.

     Paris Milling Wheat up the equivalent of 16 cents.

     U.S. Winter wheat planting on schedule at 38%.

     Iran is expected to attack Israel shortly (Surprise!).

     The trend in wheat is upward. This is a day-by-day analysis, with some “non-normal” factors. Chicago is 32 cents above its simple 60-day moving average.   

Stay tuned.

Market Bullets Tuesday October 1, 2024: pre-Dawn

     Diesel backing down, now trading at same level as September 17.

     Wheat trend is positive, with a lack of conviction. The money funds are the most likely source of movement until a fundamental factor emerges. Production in the southern hemisphere or continued worsening in Russian wheat country growing conditions.

     Commentary over the next few days may be limited due to family meeting responsibilities. Charts will be updated as normal.

     This stuff is actually trackable. Let’s track it!

Market Bullets Monday September 30, 2024: Post-Report Close

      Monday, September 30th  - USDA Annual Small Grains Summary and Stocks-In-All-Positions reports were released at 9:00 AM Pacific time / 11:00 Central.

U.S. Domestic Wheat Production. (In Billion Bushels):

Pre-Report Average Trade Guesses:

All Wheat       All Winter       Hard Red         Soft Red          White              Spring             Durum                     

1.966               1.350           .768                 .342                 .244                .540            .760

USDA Reported:

All Wheat       All Winter       Hard Red         Soft Red          White              Spring             Durum                     

1.971               1.249           .770                 .342                 .236                .542                .800

Above+ or Below- Trade guess

+ .005            - .101            +.002                =                   -.008                +.002              +.040              

Pre-Report average guess for Stocks-In-All-Positions report: All Wheat: 1.973 Billion versus 1.76 last year.

USDA Reported:                                                                     All Wheat: 1.985 Billion versus 1.767 last year.           

     The net result of the report was a wash.  There were no surprises. Stocks of wheat have  been counted at .012 billion (12 million) bushels more than the average trade expectation. The result was a very slight jump in prices that was quickly pulled back into line with previous trading levels and a closing settlement a few pennies up on the day. A “relief rally”. The brakes are off. The quarter is closed. The market will move on.

     Corn settled up about 6 cents and beans were down a dime. The grains complex does not have a confluence of effect.

     The trend in wheat is still an upward slope. There are clear boundaries on the downside. Stay tuned for more on the daily.

Market Bullets Monday September 30, 2024: Pre-Dawn

     The Chicago December wheat contract on the long-term chart is trading within 25 cents of its 18-year geometric mean line, which is nearly horizontally flat.

     The U.S. Dollar Index is down as we enter the last trading day of September, closing out the month and the 3rd calendar quarter.

     Interest rates are steady to slightly higher than last week’s close.

     Gold has pulled back slightly from its all-time highs printed last week at $2,708.70 per Troy ounce in the December delivery contract.

     The wheat market is awaiting a key USDA report Monday morning.

     Israel continues to shock their enemies with ahead-of-the-curve movements.

     Putin is feeling enough pressure to threaten nuclear responses toward those supporting Ukrainian efforts, especially as they have been attacking into Russian territory with some success.  

     More commentary following the data-dump.

Stay tuned.

Market Bullets Friday September 27, 2024: Close

     Chicago December wheat contracts remain in a 23-session upward slope on the charts, trading about 60 cents higher than the August 27th low. The Friday closing price is 15 cents above the 60-day moving average, keeping our “hold” indicator lit for incremental marketing sales. The trend is slender, but every day it continues unbroken makes it more credible. The price support tripwire alarm zone is $5.14-$5.20. A close within this zone is a warning. A close below it is a new downward bias and a continuation of the downtrend that began in May of 2023.    

     Not to be gloomy, but the last time Chicago wheat contracts went sideways in the same zone as the present high-low range, it lasted over 6 years…there were opportunities all along the way, but it was more demanding of serious wheat marketers.  

     U.S. Dollar Index is down just 1.12% on the month.

     Gold December delivery contracts printed a fresh, all-time high on Thursday, but backed off for the first lower close since September 17th on Friday. The 45-degree angle of gold’s price rise over the 32 weeks since mid-February of 2024 has carried that metal up more than $700 per Troy ounce to $2,708. The trend line is still very strong.  

     Monday morning will be dominated by USDA data releases (see Friday Pre-Dawn Update for more information).

     More commentary after the reports.

Stay with us on this train. It’s bound for glory!

Market Bullets Friday September 27, 2024: Pre-Dawn

      Monday, September 30th  - USDA Annual Small Grains Summary and Stocks-In-All-Positions reports are due at 9:00 AM Pacific time / 11:00 Central.

Pre-report average estimates of U.S. wheat production stats (In Billion Bushels):

All Wheat        All Winter       Hard Red         Soft Red          White              Spring             Durum                     

1.966               1.350               .768                 .342                 .244                 .540                 .076

     The trade creates these pre-report guesses through various surveys, then USDA offers new stats. If the trade is wrong by more than a few percent, the market reacts very quickly to adjust. Surprises stimulate volatility and sometimes set up a new long-term price range. If the trade has it close to right on, then the market is free to resume whatever it was doing before the pause ahead of the report. Sometimes it’s a kind of “brakes off” attitude after a report reveals nothing new, allowing position adjustments.

     Russia’s wheat seeding pace is at an 11-year low on lack of moisture.

     USDA reports All Wheat 2024/25 export sales for the week ended on September 19 at a marketing year low of 158,938 metric tonnes, below the 200,000 - 600,000 metric tonne estimates.

     Most government and private wheat fundamental analysts around the globe have been making very incremental adjustments to their wheat production reports. This is an indication of a market that is growing complacent about wheat supply.

     The Chicago wheat price pattern after midnight heading into Friday morning was quietly trading down 1-3 cents just below the Wednesday/Thursday high/low range.  KC Hard Red Winter (HRW) was off just 1 cent, and Minneapolis Hard Red Spring (HRS) futures were only about ¾-cent off of Thursday’s close. The overall short-term trend pattern is flat, sitting right on top of the 17-session mean line back to September 4th, now trading 68 cents above the low of $5.14 set back in the first week of August. With a major report due out Monday morning, Friday’s market tone is likely to be subdued unless there is an injection of anxiety from the war(s) or weird political activities, but it is month-end and quarter-end as of the close Monday, so the money funds may be needing to make last moment position adjustments, making room for some volatility. There is a chance for some fireworks on Monday.  

It’s trackable. Let’s track it!

Market Bullets Thursday September 26, 2024: Pre-Dawn

     Very early trade in wheat Thursday morning shows a couple of cents of follow-thru from Wednesday’s powerful upward shot. The market is in a vulnerable price zone, approaching a technical challenge of important price chart levels.  

     Wheat prices have yet to achieve the 38.2% retracement level*, about $6.11 in Chicago December contract prices. (see Daily chart above). If that upward hurdle is overcome, the next upward retracement ratio target is the 61.8% price around $6.68, about 57 cents more. A pullback from the present price area (failure to penetrate the $6.11) would suggest the market has begun to exhaust its buying resources and will need to re-test the lows around $5.14 again. Base-building at long-term lows is often a teejus affair, but let’s not allow the market to fade below the 59-session mean at $5.98 without taking a little bite if appropriate to plan.

*”Retracements” are usually significant contra-trend moves. The retracements to which we refer here are prices moving back upward from lows toward previous highs. It has been shown that these moves are often expressed by the markets in repeated ratios of the downward price moves. The numbers are derived from a well-known pattern known as the “golden ratio”, or “divine proportion” made popular by followers of the mathematician Fibonacci. The use of these figures may seem like voodoo, or tarot cards to some, but they have been useful in real world applications. Call for more detail and references for further study.

    Tropical Storm Helene is nearing hurricane strength in the Gulf. The storm is expected to be very wide, heavy, and likely to interrupt corn and bean harvesting, but not to the point of extreme damage. Not a big market mover for wheat.

     2-year Treasury yields are trading near 3.53%, having printed new long-term lows overnight. The trend in interest rates is lower, a factor for weak Dollars, and indirectly toward better wheat prices.

Opinion/Editorial:

     Global financial transparency has been a pillar of reality-checking for a long time. Whenever the geopolitical environment would get out of balance in some way, it has always been possible to take the temperature of the world by looking at the markets. This is still true, with Copper, crude oil, interest rates, global dry bulk freight, Hong Kong Index, etcetera…all taken in a general, trend-watching, volatility-measuring way. This may be a small comfort in a world that seems to be coming off its hinges, but the alternatives for trustworthy data all seem to be twisted into political pretzels in various ways (journalism is in trouble).

     The futures markets are mostly driven by real decisions using real money, an underpinning of self-interest that is reassuring in its reflection of the human propensity for the careful and deliberate handling of wealth. The markets are not reflecting fear and loathing, at least not yet. Even wheat and the other food commodities are more stable than the aggregate of the news networks might lead one to believe. If this “money serenity” changed suddenly, through the lens of the commodity markets we would know with greater certainty than if it were debated on CNN, FOX or TikTok. Even the equity markets are more prone to whimsical decisions than the futures markets, but that is old news.

     The thing that is making us a little uneasy is what appears to be an unraveling of the rug, or more succinctly, the Ruble. That little window on reality provided by the patterns displayed by that currency in global markets is now closed, and it is no longer possible to find a public quote on Russian (Urals) crude oil. These things are not central to most of our lives, and do not carry a big impact on most of our western world, but the loss of  transparent and open trade data is a serious problem for a world that is running short of good, reliable factors that make free trade possible. This is pushing us toward a very different scenario than we would prefer, one in which openness and mutual gain is no longer the prime directive.

     Can we do anything more than observe and try to understand? We must not allow ourselves to be pushed into an unbalanced, emotional state. One thing is for certain; we can reduce anxiety and stress by knowing more. Fear, anger, hatred, suspicion, and all of the other nasty feelings that we have seen on vivid display of late are base products of ignorance. It behooves us to work like hell to shuck off ignorance and make good decisions with a good will. Observing the commodity markets is a small way of achieving a step toward knowledge, one of our best goals.    

Stay tuned, stay focused, stay cool.

Market Bullets Wednesday September 25 2024: Pre-Dawn

     The December contract for Chicago wheat futures is trading about 85 cents per bushel above the calendar year low of $4.93½ in July. The trendline is positive, but has struggled to make progress in September. The driving factors for the rise have been short-covering by the large money funds, and a fair number of crop production estimate declines from various global wheat regions, none of which taken alone would have the power to spook the market higher, but as an aggregate are limiting the supply numbers ahead. The war(s) have had the effect of making the global wheat markets wary, but not agitated.

     U.S. corn and soybean crop conditions are each more than 10% above their 5-year average Good-to-Excellent ranges to date.

     Ukraine’s 2025 winter wheat planted acreage estimate may increase if they receive decent October rains. They are substantially behind last year’s pace of seeding at this point.

     Monday, September 30th at 9:00 AM Pacific Time / 11:00 Central, USDA will release the Annual Small Grains Summary and the Quarterly Stocks-in-All Positions reports. The pre-report trade talk is that wheat stocks are expected at an average guess of 1.973 billion bushels, in a range of 1.794 to 2.09 billion. The numbers are from a Reuters survey.

 Gold once again posts a new all-time high at $2,694.90 per Troy ounce, the 8th new high in the last 10 sessions, now about $269 above the previous significant pause at a high price on August 20th.

     Chinese Yuan versus the U.S. Dollar is in strengthening phase, trading at its strongest since May of 2023, as the U.S. Dollar Index (which does not include the Yuan in its calculation) is trading at its weakest since July of 2023. The drivers for the Dollar Index include an interest rate decline as part of a drop in “real” interest rates in short-term paper (rate – inflation and  taxes). The People’s Bank of China unveiled a massive stimulus program today. The indirect effect on U.S. wheat exports is to make dollar-denominated wheat less expensive in terms of other currencies.

     The wheat market is hunting for a mandate. The trend is positive (sort-of) and above the 60-day simple moving average, lighting the “hold” button on the board. That average is at $5.66 in Chicago December futures, about a dime under the current trading level. This is a slender margin, so should be observed. If that occurs, we will see it!

Market Bullets Tuesday September 24 2024: Pre-Dawn

     Black Sea (Russian) wheat growing conditions have encounted some adversity. Too dry in the west and too wet in the eastern regions.

     Australia has pulled back on their crop projections, especially in the Western Australian (WA) region where their “finishing” rains as the crop reaches maturity have been too little.

     U.S. winter wheat planting is on schedule at about 25% done versus a normal 26%. Spring wheat harvest is done.

     The wheat price in Chicago on Monday was strong, up about 13 cents in December contracts. KC showed a plus-10 and Minneapolis a plus-8. PNW white wheat coast delivery bids gained a dime back to $5.95. Paris was up $.13,  altogether a positive day across the board. The big factor is a conglomerate of small negative adjustments in growing conditions in both hemispheres.

     The trend in wheat prices is upward, a young and uncertain move, but with some promise. This requires some tracking.

Stay tuned for more on this channel.  

Market Bullets Monday September 23, 2024: Pre-Dawn

     Sunday after midnight, heading into a new Monday session, Chicago December wheat contracts were up 7½ cents, just barely below the high points of last Thursday and Friday’s ranges. Kansas City Hard Red Winter (HRW) wheat futures were up 5-6 cents, along with Minneapolis Hard Red Spring (HRS) Dec also up 7½. Corn and Soybeans were on-board, from 4-10 cents better respectively.

     The rapid decline in open interest (outstanding futures contracts, each consisting of a buyer and a seller) in Chicago wheat appears to be at an end, having dropped almost 73,000 contracts since late August, the smallest participation since last January. The fact that this decline occurred during a price rally into the teeth of the norther hemisphere harvest’s end suggests that many of the short-sold contracts that had been held by the money funds for weeks and months have been covered (bought back) without rolling them into deferred months. The funds have some dry powder and can be expected to re-construct a larger wheat position in weeks to come, but the direction of that effort is yet to be told. It does make it look like the seasonal lows are printed. A chapter is closing.

     The positive trend in the wheat price is a spindly little seedling that will need time to grow. Meanwhile the marketer should be patient. We use the 60-day simple moving average as a guide for throttle-setting. If the current price is above that average, hold. If the cash price drops below, get caught up. If cash manages to hold above the line, minimize sales. It’s dumb simple, like a box o’ Rox…It can obviously be improved in many ways, but by itself it is reliable as an indicator of intermediate trend. The intention is to hit the annual average of wheat prices or better… a whole lot better in years when the uptrend is strong, and the same goes for when the trend is very negative. It can save us from holding onto a bad position too long.  Call for more discussion. (509) 337-8417 between 11:00 AM and 3:00 PM Pacific Time.    

     “The lack of spring rain across the grain growing regions of Western Australia has resulted in what was, over the last two months an increasingly high potential tonnage year, to now looking less likely”, according to the Grain Industry of Western Australia Crop Report on September 20th.  

     Gold futures December contract hit a new all-time high of $2,659.80 per Troy ounce in very early trade Tuesday morning. Gold has gained $660 per troy ounce in the last 157 trading days since the calendar year low on February 14th, 2024. “Gold prices have continued to hit fresh highs in 2024 due to a wide range of factors — from escalating geopolitical risks and the interest rate outlook to budget deficit concerns, inflation hedging and central bank buying.” according to JP Morgan’s Gregory Shearer, Head of Base and Precious Metals Strategy.

     There is something about this rally in gold that is important as a warning. We need to watch the currencies and bank behavior.

     Opinion:  This market is nervous, although the interest rates and outside markets all seem to be “business as usual”. Ukraine is still alive and kicking. There are reasons to keep up the resistance to Putin. He should not be encouraged. Israel is ahead of the war-curve at the moment. The benefit to us in the Middle East of Israeli strength is a discouragement of the axis that is being created between Russia and the Iranians. Ultimately the Chinese are very carefully observing the various messes and calculating their approach to Taiwan.   

This stuff is trackable. Let’s track it!  

Market Bullets Friday September 20, 2024: Pre-Dawn

     Thursday put wheat prices back to near unchanged from Wednesday’s close. Week-to-date, Chicago December futures are entering Friday at about minus 24 cents. The price range is hanging just above the 60-day moving average, flirting with a key support zone that has been tested before around the 54-session mean line at $5.58. If this little congestion zone holds up to the selling pressure, we may be able to launch a fresh new week next week with a minor mandate for upward movement. This analysis is short-term and does not help much with actual trend following, but it is an exercise in tonal examination, or detection in market attitude (mostly entertainment while we wait for new input, i.e. the Small Grains Summary and Quarterly Inventory reports due out on the 30th at 9:00 AM Pacific / 11:OO Central. If that mean line along previous buyer support lines does not sustain, then the old low is bound to be tested again.

     In yet another tiresome episode, congress must pass a new U.S. government funding measure by September 30th to prevent a shutdown.

     The International Grains Council (IGC) The International Grains Council (IGC) trimmed its forecast for 2024-25 global wheat production by 1 MMT to 798 MMT, though that would still be up 3 MMT (just 0.4%) from last year. These microscopic adjustments bear almost no weight in day-to-day wheat price movement.

     Russian wheat harvest is about 80% completed. The US Department of Agriculture (USDA) Foreign Agricultural Service (FAS) is projecting a 9.3% decrease in Russia's wheat crop in 2024 compared to 2023, to 83 million metric tons (MMT).

     Approximately 90% of the world's wheat is produced in the Northern Hemisphere. Since about 68% of the world's land mass and approximately 67% to 70% of the world's arable land is located in the Northern Hemisphere, the competition for sales between Russia, the U.S., Canada and Ukraine is bound to intensify, putting pressure on efforts to be efficient, although Russia apparently still has many millions of hectares of land that have yet to become wheat producing. Efficient production points directly at the technology of wheat production, including bio-technology. The regulatory acceptance of GMO wheat is the easy part. It is end-user acceptance of the product that has prevented any GMO wheat from being developed or grown in the U.S…until now.

     The U.S. Department of Agriculture (USDA) has approved the production of a drought-tolerant, genetically modified (GMO) wheat variety, HB4, developed by Bioceres Crop Solutions. The USDA's Animal and Plant Health Inspection Service (APHIS) concluded that HB4 wheat is not a greater risk of becoming a plant pest than traditional wheat varieties. This means that HB4 wheat will not be subject to the strict regulations that govern genetically engineered organisms.

     Will the end-users agree with this assessment? Is the gain in efficiency enough to overcome obvious consumer resistance?  These are serious questions that will haunt U.S. domestic users and global customers, forcing a global decision that had been deferred since the resounding rejection of Monsanto’s “Roundup Ready” variety a couple of decades ago. It begs the question, “Is this the comeback for the idea of Identity Preserved wheat?”

     Noticeable: December gold futures have gained $660 per Troy ounce since mid-February, putting in a new all-time high at $2,637.90/ounce Friday morning September 20, 2024.

Stay tuned.    

Market Bullets Thursday September 19, 2024: Pre-Dawn

     The Ukrainian government declares 2024/25 wheat exports will be limited to 16.2 million  metric tonnes, 20% of which has already been shipped.

     Private Russian analyst SovEcon increased their 2024 wheat production estimate by 400,000 metric tonnes to 82.9 million tonnes.

     The pace of Chinese imports of wheat has reached long-term, multi-year lows.

     Ukraine has achieved a serious blow to Russian stockpiles of missiles, artillery ammunition and other supplies in a  major storage depot in Russian territory, some 300 miles from the Ukrainian border.

     The best indicator available for Black Sea wheat prices remains Paris milling wheat. If the Ukrainian efforts begin to be a game-changer, the effect of wheat, if any, will show in Paris first.

     The behavior of wheat prices in Chicago on Thursday early AM trade is weak. By 2:08 AM Pacific Daylight time the December price was breaking into new intra-day lows, down 6¼ cents at $5.69½. KC Hard Red Winter (HRW) December contracts were also off about 6-7 cents, while Minneapolis Hard Red Spring (HRS) was down 4½.

     Chicago wheat has given back almost all of last week’s 28-cent gains, and early Thursday trade in the December contract was right on top of the 60-day moving average. A close below $5.67 would light the “go ahead” button for incremental sales according to the “Box-o-Rox” rules (call or text for details). A failure to hold above the $5.60 price low from September 9th would likely trigger additional selling energy in the market. The tone is negative.

This stuff is trackable. Let’s track it!  

Market Bullets Wednesday September 18, 2024: PM

Interest rate sensitive markets reacted to the Fed annoucement of a .50% rate cut with a shrug. They had already positioned it.

The Russian ruble is trading at its weakest value on international markets, including in the Yuan and the Dollar since October 10, 2023.

Gold touched a new all-time high on Wednesday morning, then settled a bit lower.

The wheat market was flat to very slightly lower across the board, including Paris milling wheat, down .75 Euros per metric tonne (about $.02).

Market Bullets Wednesday September 18, 2024: Pre-Dawn

     Wednesday early AM trade had Chicago and KC up 2-3 cents, and Minneapolis HRS up 1-2 cents.

     Tuesday’s trade in the wheat futures complex gave no change in any of the three major U.S. exchanges. Paris milling wheat was down €1.25 per metric tonne (about $.04 per bushel) at the close of trade Tuesday. Chicago Soft Red Winter (SRW) wheat remains in a holding pattern in the top 30% of recent trade ranges.  

     “What is the trend in wheat prices?” This is what emerges: The December Chicago futures price is trading in the same daily range as it was on July 15. The current trade is about 23 cents below the high from last Friday, and 55 cents above the low from August 27. In a market that has become accustomed to thinking about wheat price changes in terms of dollars per bushel, the recent flat sideways range is 77 cents from low to high. Enough for some opportunistic trading, but for marketing purposes that is a very narrow range over two months old that has not allowed a trend to emerge. The long-awaited seasonal low is probably in, but that does not define a shift to an uptrend, only a point of reference.

     We work with what we have; a definable low that will function as a tripwire alarm if it is broken downward, and a grinding upward tendency that will allow the exercise of patience.

     Wheat producer sales have slowed.  In the northern hemisphere most farmers have shifted out of harvest’s shorter operational (spending) gears into the tall, speedier (planning) ones. All of those informal estimates we made all season long about efficiency, expenses, and volume are now backlit by real numbers.  The consensus is that overall things went “…pretty good”.  Most of the easy sales of wheat to pay short-term expenses have been completed, so the bushels that remain are entering positions that will require some higher prices to lure them back out again.

     There is an expansion of war expectations marked by exploding pagers in Lebanon and cross-border activities into Russian ground by Ukraine. Putin declares that only he can strike with impunity anywhere in Ukrainian territory using foreign-made weapons. Certainly the Ukrainians will understand that they must fight with one hand tied. Meanwhile Israel’s leadership continues to be castigated for a conflict that was obviously initiated by their sworn enemies. The global anxiety about this vague but ominous trend is a factor for wheat prices at some point. It is not at all clear whether it is for higher or lower effect, but probably more for volatility than trend. More on this later.

     This is an environment that requires a wider lens observation. The trend is still above the 60-day, “Box-o-Rox” moving average by a mere 8-10 cents, still nominally positive, but without conviction.

We’ll try again tomorrow…Stay tuned.   

Market Bullets Monday September 16, 2024: Pre-Dawn

     Another new all-time high in December delivery gold contracts at $2,617.40 per Troy ounce on Sunday evening heading into Monday, September 16.  

     Diesel is not showing any new tendency to rally, still trading within a few cents of its lows that date back to December 2021. Crude oil, Diesel’s parent contract, is trading quietly at $69.04 per barrel, near its  challenge low last week on Tuesday at $65.27.

     The global economic environment is clouded for the moment with Chinese domestic issues that may require some vigorous fiscal “easing” (sound familiar?). With Russia still on a wartime economic basis, aggressively selling whatever they can to raise capital, and the Israelis distracted by a continuing expensive and risky war effort, world business is not demanding energy and materials like it would without these problems. Meanwhile there is still wheat for sale, although farm selling in the U.S. has slowed as producers are aware that the seasonal lows are probably in, although there is not a long list of reasons to rally wheat prices. 

     PNW white wheat prices are trading on parity with Chicago, not an unheard-of condition, but also historically a point from which to expect expansion in the basis.  

     Chicago wheat is trading at its 38.2% ratio of retracement of the previous downward move from its late May high point. This is a testing price. If the December cannot move decisively above that level (around $6.12) toward the next ratio target at $6.42 or so, it would be likely to see a challenge of the $5.14 lows of early August (Our “Seasonal” lows). For the moment there is a pause for any kind of cue, like maybe the Federal reserve interest rate game, or the quarterly Stocks-In-All-Positions or the Small Grains Summary reports at the end of the month. The short-term slope is still positive and above the 60-Day moving average, displaying a “hold” on incremental sales unless the current price ($5.86) drops below that number; $5.68 early Monday (yes the number is reversed).

     The Federal Reserve Board will announce rate changes after its two-day policy meeting ends on Wednesday. The trade consensus is that they will cut rates by between 25 or 50 basis points. Either way, it will be the first rate cut from the Fed since early 2020 and the bond and equity markets are really likely to be subdued until this key bit of data is released. For wheat it is unlikely to have a direct impact, but the price of money has some influence over everything.

     U.S. Army Corps of Engineers has announced normal planned lock maintenance on the Columbia River from March 9 to March 22, 2025, slowing or halting wheat and other barge traffic and letting the railroads have a moment to go to work.  

     The market will move, we just have to be aware of it when it does. Stay tuned.

Market Bullets Thursday September 12, 2024: AM - Post-USDA Report

A civilian commercial bulk vessel loaded with Ukrainian grain was hit Thursday morning by a Russian cruise missile just outside of Ukrainian territorial waters off the Romanian port of Constanta. The ship did not sink and there were no casualties reported.  

Wheat market reaction to the September World Ag Supply/Demand Estimates (WASDE) was muted. Corn was the featured factor and that market immediately swung back and forth in a 10-cent range, balancing out after the first fifteen minutes with the December contract down about 4 cents.

World wheat production is lowered 1.4 million tons to 796.9 million, but remains a record, as a reduction in the EU is only partially offset by higher production for Australia and Ukraine.

Global wheat consumption is increased 0.9 million tons to 804.9 million, primarily on higher feed and residual use for several countries more than offsetting a reduction for the EU.

See WASDE <here>

Gold December futures hit a new all-time high of $2,583.60 per Troy ounce on Thursday morning. The previous high of $2,570.40 was printed on August 20.       

Market Bullets Thursday September 12, 2024: Pre-Dawn

 Market Bullets Thursday September 12, 2024: Pre-Dawn

     Thursday morning, USDA’s World Ag Supply/Demand Estimates Report due out 9:00 AM Pacific / 11:00 AM Central. Bloomberg surveyed analysts put up an average pre-report guess of a less-than-one-percent reduction in U.S. ending stocks of wheat (822 million bushels – down just 6 million). The trade talk is for slight reductions in overall production figures both U.S. and global. Demand will be the focus. No surprises are expected.

     There is a USDA “Small Grains Summary” due out September 30th at 9:00 AM Pacific / 11:00 Central, which will show acreage, area planted and harvested, yield and production of wheat, oats, barley, and rye, by state and U.S.; also wheat production by class. The WASDE for Thursday, September 12 will be somewhat muted in advance of the more sophisticated stats pending.

     Per USDA’s Foreign Ag Service on September 10: “Biblical” rain in Kazakhstan’s major growing regions has cut wheat and barley production, reducing its quantity and quality. In the previous Kazakhstan Grain and Feed Report, Post warned that if the worst-case scenario of rains occurred during harvest, up to 10 to 15 percent of the barley and wheat crop could be lost. Post has revised the production estimate for wheat down from 15.8 MMT to 14.2 MMT and barley down from 3.4 MMT to 3.0 MMT, or 10 percent less than the August 20 estimate.

     Kazakhstan was in recent years the 14th largest wheat producing region in the world, but their exports of wheat vary as their production levels swing broadly. They border Russia to the north and west, China to the east, Kyrgyzstan to the southeast, Uzbekistan to the south, and Turkmenistan to the southwest, with a coastline along the Caspian Sea. They are an independent country and a member state of the United Nations, World Trade Organization, Commonwealth of Independent States, Shanghai Cooperation Organization, Eurasian Economic Union, Collective Security Treaty Organization, Organization for Security and Cooperation in Europe, Organization of Islamic Cooperation, Organization of Turkic States, and International Organization of Turkic Culture.

     Street says that Kazakh citizens and uneasy about Russia’s invasion of Ukraine, with some feeling that there is a chance it could happen to them, as well. There are strong economic ties to Russia, but they are not dominated by Putin.

     The circumstances in Kazakhstan may represent only a few percent of the global wheat production and trade, but this is an example of a possible “death by a thousand cuts” stealth scenario that could emerge as a global wheat price driver. Moisture as a rule eventually turns out to be a net positive, even when excessive, but “The answer my friend, is blowin’ in the wind.” Thankyou Mr. Dylan.

     Wheat price charts are are showing some energy in very early trade Thursday  after midnight. Chicago was up 8 cents or more in the December contract. KC also up about 7, and Minneapolis Hard Red Spring (HRS) was trading up 6-8. Paris Milling wheat December futures was up €2.00 per metric tonne (about 6 cents per bushel). All of this is somewhat unusual activity ahead of a WASDE report.

     Chicago’s pattern is trading firmly above the Box-o-Rox 60-day moving average, which is a very simple and crude signal to hold up on incremental sales of wheat…to “hide and watch” as cousin Terry would say.  The short-term technical target for this attempt at an uptrend is around the 38% retracement level of the downward move that started in late May of 2024. That would be something like a +25-cent move from the current December SRW futures price.

     At least there is something to watch. Stay with us. There will be more.  

Market Bullets Wednesday September 11, 2024: Pre-Dawn

     USDA’s World Ag Supply/Demand Estimates Report due out Thursday morning, 9:00 AM Pacific / 11:00 AM Central. Bloomberg surveyed analysts put up an average pre-report guess of a less-than-one-percent reduction in U.S. ending stocks of wheat (822 million bushels – down just 6 million). The trade talk is for slight reductions in overall production figures both U.S. and global. Demand will be the focus. No surprises are expected.

     E.U. officials are reporting crop-year-to-date exports of wheat at 4.82 million metric tonnes versus 6.25 million tonnes by the same week last year.  

     Interest rates as represented by the 2-year and 10-year Treasury Notes continue to ease. The September Fed meeting is coming, and the trade expects a rate cut, which is already baked into the market.

     Gold is sniffing at the record highs ($2,570.40 per Troy ounce) from August 20th,  trading at $2,555.00 just after midnight Wednesday morning). At least partly due to slow expansion of war in Ukraine as Iran indicates material support for Russia and Chinese/Russian joint naval exercises are planned in the Pacific. Israel is unable to agree to Hamas demands for cease-fire as hostages die and Iran promises retaliatory strikes.

     Crude oil and diesel fuel contracts are not indicating anxiety. There is some softening of Ruble values versus the Yuan (The official global settlement currency of Russia since June 2024 as the Petro-Dollar has become difficult to negotiate due to banking sanctions).

     Copper, often a decent indicator of global manufacturing and construction activity demand for the essential red tubing and wire metal, is trading at about $4.1455 per pound, just above its 44-month mean line of about $3.96, suggesting business as usual.

     Very early trade Wednesday had Chicago wheat up almost a nickel, while KC Hard Red Winter (HRW0 was about a penny better than Chicago’s effort. Minneapolis Hard Red Spring (HRS) contracts were trading steadily at plus 4½. Chicago has now reached a high almost 65 cents above the first week of August levels, less than 15 cents from a ratio target representing a 38.2% retracement of the entire move down from the May high of $7.20. A confirmation above this target places the next hurdle at $6.42, another 63 cents above current prices. The market is capable of such a move, which would represent a decent marketing opportunity.

     With a background of global anxiety “wall of worry” is a classic sneaky upward adjustment environment. Lets not be asleep on this!

Stay tuned.   

Market Bullets Tuesday September 10, 2024: Pre-Dawn

     Russia’s IKAR cut its estimate for the country’s wheat production to 82.2 MMT, down 1.6 from its last estimate; exports were cut by 0.5 MMT down to 44 MMT. Both of these are now below of USDA ahead of Thursday’s upcoming report.

     China is facing increasing indications of deflation, where prices fall and money becomes scarce, a condition opposite to inflation, but at least as uncomfortable. The last major episode of deflation in the U.S. was in the early 1930’s, after capital became hard to find following a large number of bank failures. For consumers who are deeply leveraged, common in the U.S., paying off debts becomes more expensive, as a dollar is more valuable over time in deflationary conditions. During inflationary periods, dollars become less valuable, benefiting borrowers (especially the government, the largest debtor). Both inflation and deflation are most influenced by the operational effects of money supply under the direction of central banks, such as the Federal Reserve.  

     Russian wheat harvest is past 72% completed.

     PNW winter wheat seeding is slightly ahead of schedule: WA 34% done vs 27% average, OR 4% done vs 6% and ID 6% vs 7% for a net 4% lead…not a market-mover stat!

     Subsoil Moisture: WA 64% short-to-very-short, OR 72% STVS and ID 54%.  

     Topsoil Moisture: WA 53% STVS, OR 77% STVS and ID 65%.

     There are many wheat production sources in the northern hemisphere that have not found optimal conditions for harvest this year. Most of the U.S. wheat producing states are 50%-60% Short-to-very-short. If moisture conditions do not improve, the wheat complex may have to re-calc the supply in the next crop-year. Its way early to dig into next year’s crop stats, but if the market begins to perceive a significant balance sheet shift, it may finally change the tone enough to allow us to see a lift off of long-term low ranges.

     That’s the best we can find to read this market. The wheat price pattern is flat. There is no buy signal yet, so stay on marketing plan incremental sales.  

     Check in here often. You never know when the weather will change, nor the market.

Market Bullets Monday September  9, 2024: Pre-Dawn

     Paris Milling Wheat contracts indicating -€1.50 in early AM trading. Chicago is off about 1-3 cents, while KC is flat to plus 1½. Minneapolis is the weakest, down 2½. Chicago wheat was struggling with a lack of interest until about 2:30 AM Pacific Daylight Time, but then showed a little, 4-cent spike of buying without much follow thru, kind of like a “head-fake”, but no gain on the play.

     Treasury paper is still leaning toward lower rate movement, with the expiring September futures contract about to shift to the Dec with a small bump in anticipation of lower rates this fall.

     Crude oil and Diesel are flat on Early Monday trade, displaying very small gains. Both put in lower closes on Friday. The trendlines in fossil fuels continue to be weak.

     The U.S. Dollar Index is floating near its 8-month lows.

     The trading environment is in a quiet disarray, as large factors capable of moving the markets are merely rumbling and groaning underground. In this kind of market weather, we try to use the futures markets as feelers, a bit like a spider uses one corner of a large web to detect movement. Currencies, metals, energies and food are sensitive to upsets, so we rely on those markets as indicators of market health. We apply this surveillance for wheat market analysis and for global market temperature for general purposes. We will see trends changes developing in the charts early. The old-timers will tell you that the market makes the news, rather than the news making the market. A large proportion of the time, by the time it hits the wires, its already in the market.

     The price trend in wheat is still in a downtrend as official chart status. If the marketing plan says sell a bit, better getr done. The odds of a significant more up are flat.  There certainly is plenty of potential for higher prices, but there is a lack of emotional fuel to run the buying engines. We will stay tuned so you can stay tuned.   

Market Bullets Friday September  6, 2024: PM Weekly Close

     From the professor: 2-Year Treasury Notes are at their lowest interest rate price since March 24, 2024. 10-Year Treasury Notes and 30-Year T-Bonds are at their lowest interest rate since August of 2024. A noticeable feature of interest rate declines is a weaker U.S. Dollar, as capital flows to the best real rate of return among various currencies. The interest rate, minus inflation, minus taxes, with a dash of estimated economic stability is the “Real” rate. The higher the price of a T-bill, T-Note, Corporate bond, etc., the lower the rate of return, and vice versa. For wheat marketers, interest rates affect the cost of storage of unsold wheat over time, as the capital in that wheat is not earning while it is stored...”opportunity cost”.

     Diesel, at a new low on Friday morning, is at its lowest since December 2021, and is a factor in the easing crude oil price. Economic slowing and the market’s apparent conclusion that the risk of war effects on fuel costs is declining.

     On Monday morning, at 5:30 AM Pacific Time/7:30 AM Central, the Canadian Ag Statistics agency (StatsCan) will release their All-Wheat stocks report. The trade’s pre-report average guess is 3.555 million metric tonnes versus 3.512 million tonnes last year at this point. Canola is guessed at 2.925 million tonnes versus 1.506 last year. With China threatening a trade tariff against Canadian canola (as Canada, in concert with the U.S. and E.U.) is imposing tariffs on Chinese electric cars), the suggestion is that canola prices may be soft for some time.   

     The Chicago December wheat delivery futures contract closed out the week ended on September 6th, 7½ cents below the “Box-O-Rox” marketing indicator (invented years ago by your MarketBullets® editor in an effort to simplify an beginning point for marketing plans). It’s only a 60-day simple moving average, accounting for about 90 calendar days. The rules are plain: Divide your total annual production by 12, creating 12 portions of wheat, each about 8.3% of the total. Then each month at the close of the first trading day check to see if the current price is above or below the BoR average.  If above, hold off making a contract for sale of the 8.3% of your crop designated for that month. Then observe the price movement each day until it closes below the average upon which the increment in question is sold. For each month that passes with the current price above the BoR, accumulate more 8.3% portions of the crop unsold until the price closes below the BoR and then release all of the accumulation at current price. If the current price never rises above the BoRe, then make each incremental sale on the first week of the month as scheduled, holding the balance of the wheat unsold.

     At the end of the year, the average BoR sale price for the year will be at or near the average price available for that period. The object is to be actively selling if the trend is downward and actively hold back if the trend is upward.  

     Can the program be improved or refined? Certainly! If you did not perceive at least a couple of ways to make the program better performing, or a better fit for your operation, you should read it again. This is really just an indicator that will cause more accurate assessment of the trend through the year. If you have no other concrete, systematic gauge of when to sell wheat, you will have mixed results over time, some of which could be disastrous. Yah, you do remember that year, don’t you?

     The short-term upward shot for the last couple of weeks in wheat is being eyed as an opportunity to sell by some. There is only marginal fundamental support for wheat prices, so technical analysis becomes the only game in town. Fund short-covering and other shenanigans will move wheat prices sometimes, but this kind of market diet can cause volatility.

     The trend is still weak and the big picture remains negative. Sell on schedule. Its still trackable. Let’s track it!  

Market Bullets Friday September  6, 2024: Pre-Dawn

     Open interest in Chicago wheat futures has declined as the price has increased over the past seven sessions, suggesting short-covering, even though the net positions shown by the CFTC’s Commitment of Traders Reports have remained steady in past weeks. As the short-sold contracts are bought back, the contracts are eliminated as the participants withdraw from the market. If the buying continues after the shorts are covered, the price may continue upward along with an increase in open interest.

     There is a growing consensus that there will be a corn and soybean crop in the U.S. this year. Most expectations are for overall corn yields to be 182-183 bushels per acre and soybeans to yield about 53 bushels/acre. Both figures lead to an expansion in carryout stocks at the end of the season. The market has little reason at this point to fear shortage, although there is still time for crop condition issues to appear.

     Fertilizer prices continue on the defensive, now six consecutive weeks slightly lower. Natural Gas, representing 60% - 70% of anhydrous production costs, is trading in a narrow band sideways that is now 10 months or more in duration.

     Chicago front month wheat contracts are trading within a penny or two of the low first traded in June of 2023. Since that date, the price range of Soft Red Winter (SRW) wheat has been between $7.77 on the high edge and $5.14 on the low down, a $2.63 cent rolli-coaster. In the small hours of Friday morning, September 6, 2024 the December futures contract is trading at $5.74 with a two-week upward move from the recent multi-year lows just 7 sessions back. This is not yet an uptrend, and the trade discussions about, “Is it over already?” are working hard at visualizing continued strength, but it is hard work grinding something from nothing. All of the fundamental stories in the news stream are small marginal changes in statistics and business as usual for global trade. If the basic rules of marketing are 1) If there is an uptrend, hold on. 2) If there is a downtrend, sell on schedule, aggressively if necessary, and 3) If there is no trend do nothing unless the plan is specifically designed to sell incrementally. There is not much of a trend. Sell on schedule.  Be opportunistic…take the small gifts when they come.

We will see the trend change when it comes. Stay tuned.

Market Bullets Thursday September 5, 2024: Pre-Dawn

As this is written, Chicago December is trading down 7½ cents from Wednesday’s buoyant close. PNW white wheat coast bids are at parity with Chicago (basis = 0).

     Harvest in the northern hemisphere is essentially completed, defining supply with no risk of shrink except for usage. The market must seek demand, which usually implies lower prices, but producer selling has slowed and there are quality issues in the European Union which Russia/Ukraine cannot cover. Money movement is the probable main driver in the current two-week upward shot, some from big spec funds taking profits and some capital from equity markets sensing a pending value expansion in commodities in general…inflation driven?

     The main trendline for wheat is under review, but has not changed yet. There are some signs of buying energy beyond a mere contra-trend “correction”, e.g. Chicago Dec contracts have moved above their 60-day simple moving average for the first time since mid-June, although the price is wobbling back and forth right on top of the daily calculation of that average. Confidence is still weak among spec traders in any real shift in direction. They are likely to replace any recently abandoned short-sold positions on any hint of exhaustion in the short-term, and intuitively it still seems risky to establish any significant new long-bought positions without some solid rationale.

     There is a period of post-harvest quiet while the world waits for the southern hemisphere thrashing to begin. Strong trend movements are a little less common in this time. Good marketing then requires a bit more attention to maximize returns.

     Stay tuned, there is always a little more.  

     The Chicago December wheat futures contract is trading about 25 cents below its 18-year mean, which is nearly flat/horizontal, a remarkable fact in the face of so much global anxiety. Perhaps it’s a good time to reflect on the truth of, “The more things change, the more they stay the same.” Everything is not an emergency. There is time to think about our path before we charge headlong where angels fear to tread.

Market Bullets Thursday September 5, 2024: Pre-Dawn

As this is written, Chicago December is trading down 7½ cents from Wednesday’s buoyant close.

     Harvest in the northern hemisphere is essentially completed, defining supply with no risk of shrink except for usage. The market must seek demand, which usually implies lower prices, but producer selling has slowed and there are quality issues in the European Union which Russia/Ukraine cannot cover. Money movement is the probable main driver in the current two-week upward shot, some from big spec funds taking profits and some capital from equity markets sensing a pending value expansion in commodities in general…inflation driven?

     The main trendline for wheat is under review, but has not changed yet. There are some signs of buying energy beyond a mere contra-trend “correction”, e.g. Chicago Dec contracts have moved above their 60-day simple moving average for the first time since mid-June, although the price is wobbling back and forth right on top of the daily calculation of that average. Confidence is still weak among spec traders of any real shift in direction. They are likely to replace any recently abandoned short-sold positions on any hint of exhaustion in the short-term, and intuitively it still seems risky to establish any significant new long-bought positions without some solid rationale.

     There is a period of post-harvest quiet while the world waits for the southern hemisphere thrashing to begin. Strong trend movements are a little less common in this time. Good marketing then requires a bit more attention to maximize returns.

     Stay tuned, there is always a little more.  

     The Chicago December wheat futures contract is trading about 25 cents below its 18-year mean, which is nearly flat/horizontal, a remarkable fact in the face of so much global anxiety. Perhaps it’s a good time to reflect on the truth of, “The more things change, the more they stay the same.” Everything is not an emergency. There is time to think about our path before we charge headlong where angels fear to tread.

Market Bullets Wednesday September 4, 2024: Pre-Dawn

     Australian wheat crop projections continue to expand, as the “Australian Bureau of Agricultural and Resource Economics and Sciences” (ABARES) has increased their 2024/25 wheat production forecast by 2.7 million  metric tonnes to 31.8 million tonnes.

     China is unhappy about tariffs being placed on their exports of electric vehicles by Canada (along with the U.S. and the European Union). They have declared that they will target Canadian canola sales into China, labeling them as “unfairly low priced”, a very thin veil on a retaliatory action, as well as being an unremarkable choice, as there are abundant alternative sources for Canola. It is just another sign of deterioration of open international trade along the fracture lines between the more authoritarian states and less authoritarian ones, although the difference seems to be in flux. For wheat marketers, the global markets are more visibly political than some previous periods, making price volatility more likely.  The potential for concentration of control over ever larger wheat producing regions by Putin’s Russia is an unsavory idea.

     The Chicago Soft Red Winter (SRW) weekly chart (December contract) shows an upward ratio target range between38.2% ($5.92) and 61.8 % ($6.41). If the trade is able to scrape together sufficient buying power to achieve a move into this range, it will be a decent marketing opportunity. KC Hard Red Winter (HRW) December has a similar target range between $6.46 and $6.84, while Minneapolis Hard Red Spring (HRS) is working on $6.41 to $6.89.

     The kind of ranges this market is capable of are in the 25-75 cent variety. Asking more than that seems intuitively excessive.

This stuff is trackable. Let’s track it!     

Market Bullets Tuesday September 3, 2024: Pre-Dawn

     Paris Milling Wheat Futures have bounced out of their lowest price since last spring. In the last 5 consecutive trading sessions including Monday September 2nd (Labor Day is celebrated on May 1st in France). The Paris contract has climbed €17 per metric tonne, or about $.50 per bushel. The dramatic statistical decline in estimates of the French wheat crop after a long and miserably wet harvest was the primary driver, but there was a featured short-covering component involved as well, comparable to the U.S. markets. The swift move up was also similar to U.S. markets in that it did not change the prevailing negative trendline. Russia is still aggressively selling wheat, The Ukraine is still able to ship wheat without being too fussy about price, and the U.S. harvest was a success. There is still plenty of wheat for sale in the world. The first weeks of the new month will have to show a positive pattern without new long-term lows in order to cause a shift in trend.

     The Paris wheat market is sometimes the leader, even though Chicago is still the bellwether of the world. The balance of the calendar year will be spent watching for demand. The effects of corn and soybeans in their efforts to find homes for all of those heavy bushels will register on wheat, their sister market.

     The retail price of road diesel in Walla Walla and Columbia Counties is within a nickel of regular gasoline for the first time in recent memory.  

     Outside of war effects and Political distractions, the wheat complex is entering a period where marketers must be opportunistic, for lack of a major trend. For some of us, that is an engaging task that is a never-ending puzzle. For others it may be a grim and grinding chore. There is no reason to suffer!  The more you groove into the trend ID, the easier it gets. The effect of concentration on the wheat market is to make us better investors and traders in all things market-oriented. It also can reduce anxiety.

     Stay tuned for another chapter in “Days of Our Wheat”.  

Market Bullets Friday August 30, 2024: Close

     Chicago Soft Red Winter (SRW) futures  front month (December) finished the week about 31 cents above the low of August 27th, a four year low. The week was driven mostly by short-covering as we closed out a week and a month, heading for the Labor Day Weekend. Money movement always has a sunny day when there is no other dominant factor in the market. As we re-enter the “real” world on Tuesday, we will be watching weather on corn and soybeans.

     It occurs to us that if Israel reaches any substantive agreement with Hamas it will probably be a price negative for crude oil. It just seems intuitive that a reduction in stress in that part of the world will cause a risk adjustment, at least short-term. A period of relative calm may break out in the global markets.

     Australia is shaping toward a large wheat production year with decent moisture, maybe the only real variable that counts at this stage of their wheat development. Talk is of a 31 million metric tonne crop. ‘Tis still a long way to Tipperary.

     Russian wheat exports are lagging last year’s pace by about 5%.

     The Commodity Futures Trading Commission’s Commitment of Traders (COT) report shows there are still relatively large net short-sold positions in each of the three major futures contracts. Marginal adjustments of a few thousand contracts in a week’s time are not market movers. The last few days of short-covering may show up as position reductions in the next report.

     It is premature to call the rally of the last week a “trend change”. The market is healthier with a more balanced participation structure between Commercials and Speculative firms, as it reduces the chances of violent price movements in either direction. This may disappoint some traders or marketers, but it does make the business of buying and selling cash wheat smoother, ultimately speeding consumption, reducing supply and...voila! Better prices!

     Keep cool and don’t over-do it at the picnic! We will be back with you on Tuesday in the pre-dawn hours.  

Market Bullets Friday August 30, 2024: Pre-Dawn

     The market already knows this: Estimated French soft wheat exports for this season will be only 4.1 million metric tonnes, down 60% from last year and below the 10 million tonne 5-year average, and the lowest in 23 years. The wheat harvest is expected to total 25.17 million tonnes, the smallest crop in 41 years.

     Ukraine’s Ag Ministry reports wheat exports since July 1st at 3.4 million metric tonnes. All-Grain exports so far in August stand at 3.0 MMT, up from 1.9 MMT last year. In 2020, Ukraine exported approximately 16.6 million metric tonnes of wheat. The next year, the year before the 2022 invasion, they exported about 23 million metric tonnes. In 2023 the wheat total was about 12 million tonnes. Consider what the market effect will be when they return to full productivity.

     Diesel prices are buoyant, but have not left the established range from August 2 to the present, about 21 trading days in duration. The larger picture is still a lower trend.

     The Chinese Yuan is stronger versus the U.S. Dollar, the Ruble is weaker versus both the Yuan and the Dollar. This is not a short-term price factor, but if the Chinese are going to buy, it should show up soon, while a cheap Ruble sets up an even more attractive Russian export wheat price.

     Gold is setting up a little, old-school “rising triangle” pattern to try a break-out to a new all-time high. The funds are pretty heavily long. Who would be the sellers here if the tech pattern fails? This contract is traditionally strong in a fear-dominated market, with inflation or anticipation of global economic problems. It deserves some observation time.

     Global markets are getting more technically integrated, allowing access to more timely information and trading of wheat.  Chicago Mercantile Exchange (EuroNext) is activating a new set of intermarket wheat spread contacts between both Chicago and KC HRW versus Paris Milling Wheat in October. Stay tuned here for more information.  https://www.cmegroup.com/markets/agriculture/grains/wheat-spread-futures.html?redirect=/wheatspread

     The short-covering rally in wheat as we cross month-end and enter a 3-day, Labor Day weekend has been refreshing to see, but is inadequate to declare a trend-change. Corn and Soybeans are dominating the trade’s market vision right now. The wheat price trend is still classified as negative. Stay on plan as we move into September. The strong carrying charge market structure is still mostly intact, making some of the add-on marketing strategies attractive. Call your merchant.

     The trading volume is likely to taper off early Friday, as many traders escape for the last family 3-day  holiday weekend of the season.

     Football 2-a-Day’s…oh those wind-sprints!

Take a day or two and consider what is really valuable in your life…then review your wheat trading plan!

Market Bullets Thursday August 29, 2024 : Pre-Dawn

     Paris Milling Wheat December futures put up two days in a row of positive price movement on Tuesday and Wednesday, the first two-day upmove since mid-July. This little reversal is influential, as it is in a market that is the clearest representation available of Black Sea wheat values, but in this case it is reflecting a poor harvest in France, Germany and other continental wheat production areas of Europe.

     Russian Rubles are weakening, both in terms of its official reference currency (Chinese Yuan) and the U.S. Dollar, now approaching the largest number of Rubles per unit in each currency since October of 2023. This is not a direct wheat price factor, but it does suggest that the economy of the world’s largest exporter of wheat is undergoing changes. It is only a yellow light flashing on the dashboard at this point, but it deserves monitoring. Russian bushels are slightly less costly to China as a direct result.

     A couple of days of short-covering going into a tree-day weekend do not a bottom make! We need to see it on the weekly charts, too. The December Chicago contract is parked on top of the 39-day descending mean line. This will not be solved before Labor Day. The next couple of days of trade will demonstrate what the trade is thinking. We will be monitoring closely.

Stay tuned.

Market Bullets® Wednesday August 28, 2024 : Close

     StatsCan official estimate for All-Wheat at 34.373 million metric tonnes. The average pre-report estimate was 35.125. Spring wheat official report at 25.351 million tonnes versus avg pre-report guess at 26.6 million. A net price-positive report.  

      France is struggling with quality issues.

      Most European wheat producers have seen a net reduction from last year’s harvest.

      U.S. wheat markets were up. That makes two (2) days in a row!  Chicago returned to its 33-day mean on the expiring September chart. KC Hard Red Winter (HRW), up 12 cents on Wednesday, is working on an “outside week” on the charts (lower low than last week and moving toward a higher close – so far). Minneapolils Hard Red Spring (HRS) gained 9½ cents, putting the lead contract (Dec) right back into the same price range of the last 6 weeks, now seen as “resistance” among the trade. So far this is not enough to declare a trend change.      

 Two more days of August trade heading into the Labor Day weekend. No markets Monday.

Market Bullets® Wednesday August 28, 2024 : Pre-Dawn

     For the money funds, month-end is a payday if profitable short-sold positions are covered, as often rewards are based on gains-per-time-period. It’s housekeeping time. The motivation to hold onto those short-sold positions is still in place, but taking some gains and rotating some positions into deferred months go together nicely as August is completed. KC Hard Red Winter (HRW) in particular has seen spreads move toward inversion as the front months have held value or even increased slightly versus weaker deferred contract prices.

     If the WSJ sez its going down, then the downtrend is over.

     Pre-report trade guesses for Canadian All-Wheat production in Wednesday’s StatsCan report average 35.125 million metric tonnes. Last year’s final was 31.954 million tonnes. The average guess for Canadian spring wheat production is 26.6 million tonnes versus 24.762 last year. The trade will react quickly if their pre-report estimates are off the mark, otherwise it may be an uneventful session.

     Bioceres Crop Solutions Corporation (based in Argentina) has apparently secured USDA approval for U.S. production of “HB4”, a GMO variety of wheat with improved drought tolerance, as well as herbicide resistance. The company has acknowledged that it will take some years before full commercialization is possible for HB4. Bloomberg article <here>.

     Fertilizer prices continue to slide gently lower.

     It is easy to forget that wheat end-users are in very good shape at this point in the price cycle. Demand is likely to expand after the northern hemisphere harvest is completed, with the usual lull in global production before the southern hemisphere cranks up their wheat sales machines. Even with all the global anxiety surrounding wars in the Middle East and the Black Sea region, along with simmering Chinese economic stability issues and their generally aggressive attitude in the Taiwan-Japan corridor, the global economic system is still relatively stable, allowing wheat to move. This is stuff that demand is made of and ultimately a price-positive background factor. The pressure is on us to market appropriately and opportunistically in this environment. All it takes is time and attention.

     The negative wheat trendline won’t change with one up-day. It will require some consolidative behavior with back-filling and testing to build a proper base from which to project the next price objective. They call it the “futures” market because it is always focused on things yet to come. News in-hand is old news. Our best chance for improvements in the bottom line is to be aware of the trend and behave accordingly.

     Labor Day is this coming Monday, September 2nd, with no markets. Friday is the last trading day of August’24, as the September futures contracts head into delivery and expiration. December is now the leading month, followed by March’25.  

This stuff is trackable. Let’s track it!

Market Bullets® Tuesday August 27, 2024 : Pre-Dawn

     Minneapolis Hard Red Spring (HRS) forward spread (Mar’25-Dec’24) has moved to a Life-of-Contract high carrying charge (March delivery is 23 cents above December), an expression of surplus available in Dec versus later delivery contracts, the harvest effect in a normal market. This same spread for Dec’24-Sep’24 is reflecting the same structure with December paying 27 cents more than Sep. It costs about 4 cents per bushel to roll from short Sep/long Dec to short Dec/long Mar.

     Tuesday morning post-midnight trade saw new Life-of-Contract Lows in Chicago December. The other wheat contracts in KC Hard Red Winter (HRW), Minneapolis Hard Red Spring (HRS) and Paris milling wheat are not far behind.  

     The wheat complex trendline is lower. If you go hunting for price-friendly news, there is a noticeable lack. The wild thing is that true long-term lows usually look, smell and taste just like that…something to be avoided (and many do precisely that). Good, solid lows often have a lonely, sour tone. We are almost there. The market is weak and weary, so it’s “Nevermore shall we see the bright sunny slopes of an uptrend.” That is a perfect attitudinal setup for a price chart base from which a change in direction could emerge. This is not a buy signal, or any kind of alarm bell. It is just an observation that lows don’t vary in their tone much. Its always like this, so this is not the time to ignore the study.

     U.S. HRS harvest has crossed the halfway mark.

     There are no major southern hemisphere wheat production regions in serious weather trouble. The Australians are getting enough moisture to grow wheat. Argentina needs rain.

     The Russians are offended that Ukraine has crossed into Russian territory and they (the Russians) are throwing large amounts of explosives at Ukrainian infrastructure, especially electric service equipment. The Israelis have once again demonstrated they can shock the their enemies with pre-emptive strikes. The oil markets have been rising in acknowledgement  of the fact that there is a steadily growing chance for Middle East oil shipping disruptions, but so far there is no real anxiety. Diesel has paused at its 60-day downward-sloped mean line.

     No new all-time highs in gold for five (5) trading sessions…boring!

This stuff is trackable. Let’s Track it!     

Market Bullets® Monday August 26, 2024 : Pre-Dawn

     Friday: KC 1-cent new low. MPLS new low 2½-cents below last week’s 3½-year low. Paris milling wheat September contracts, now the spot price for delivery, is below €200 per metric tonne. Russian wheat continues to easily dominate global export markets.

     Monday early AM: Chicago SRW is flaccid, down about 3 cents and a new life-of-contract (LOC) low in September and December futures contracts. KC HRW is down a nickel and Minneapolis HRS is down 9 cents in the September spot contract, but only 6 in the Dec, making the carry stronger, market-speak for, “sell deferred and store wheat until then.” Paris milling wheat is also negative €3.5 per metric tonne (about a dime per bushel), also a new LOC low.

     The trend is negative, as the bottom edge of the sideways range that ran from mid-July to Aug 22 has been broken. Any planned incremental sales of new crop should be completed as programmed. There is wisdom and thought in that plan. This is what “they” are talking about when you hear about emotions disrupting good trading. We have to be a little cold. Besides, there are ways of re-entering the market if the trend changes and the speculative drive becomes too powerful. Call your merchant. There are ways to improve the bottom line of sales made in this low-price environment, especially when there is a strong carrying charge in the market structure.

     The northern hemisphere harvest is all but completed, as Spring wheat goes into headers farther to the north. The next phase is not a production driven market, but demand. Now the merchandizers get to show their stuff.

     The U.S. Dollar Index is weaker, now trading at its lowest since the last week of 2023. This makes U.S. wheat a bit more competitive in the global trade, but the Russian Ruble is also at its weakest versus the Chinese Yuan since October of 2023 (since May vs the U.S. Dollar). The relationships are changing, mostly due to falling interest rates in the U.S. and due to wartime economics in Russia.

     Gold continues to push toward its all-time high of $2,570.40 per Troy ounce set just last week. Early Monday trade had December delivery gold contracts at $2,560.

     Diesel is on an upward run, looking to challenge its August 13th high.

Rant:   It is becoming clear that the future of a substantial proportion of the global wheat export trade will be dominated by Black Sea origin wheat, especially if Ukraine falls under the dominion of Moscow. Even if Ukraine escapes from the grasping hands of Putin, and all of those tough Russian and Ukrainian farmers are left to their own devices to operate as they see fit, the future amount of wheat for sale from that region will still be the equivalent to a cartel in command virtually year-round. For now the potential of such a massive supply of wheat in the hands of an autocrat like Putin must be recognized, as food and energy (aka starvation and cold winters) are much more effective weapons of socio-economic domination than nuclear missiles could ever be. Just ask the leaders of countries where food riots have led to “regime change” in the past.

Although it seems gloomy, the world is still managed by “comparative advantage”. Our advantages are technology, fertility, efficiency, education, and motivation. We can produce more precisely what the end-user wants, deliver it in good condition more quickly, while adapting to market conditions and improving every aspect of production. It is not government intervention or subsidy that will make this happen, although these things are part of our environment. Look to your leadership. Go to your county Wheat Growers Meetings. It is still the enlightened personal drive to improve, measured in many ways including profitability, which is the beating heart of the U.S. wheat industry. Don’t lose heart!

Stay tuned to this channel. There is more to come!

Market Bullets® Friday August 23, 2024 : Pre-Dawn 

     Friday early wheat trade in Chicago is soft, holding below the low end of the recent 30-day range from mid-July. Minneapolis Hard Red Spring (HRS) was the downside leader, with a minus-14-cent shot, although still holding above the recent range lows. KC Hard Red Winter closed above its daily lows on Thursday, but still was off about 9 cents, also above its recent low boundaries.  

     The rollover to December or later contracts by funds is a short-term price factor as they buy back short-sold September positions and decide whether to sell deferred contracts. This movement was probably already showing up as a shrinking carrying charge (where deferred contracts decline more than nearby - or gain less in a bounce), as shown by the Sep/Dec spread chart from July 19th to August 15th. It went from 25 cents carry to 21 cents in that time. Over the last week it has bounced back up to about 24 cents Dec over Sep. If the funds have mostly completed their roll, then the market is left without a source of buyer support in nearby contracts, while the harvested crop rolls in. It’s a sticky wickie!         

     Paris September milling wheat futures settled at lowest front month price since August of 2021, even as the continuous charts have switched to the December contract. The cash delivery price in Paris is still represented by the expiring September delivery contract. This is relevant to U.S. prices as Paris futures are the largest transparent market in the region at least somewhat affected by Black Sea prices. With U.S. contracts printing new long-term lows below the “failure” line, e.g. the lower boundary of recently sideways ranges, the global markets are speaking to us, “There is plenty of wheat for sale today, come back later”.

     The crop scouts are finding some indications of record corn yield so far.  Some bean pod counts are also higher than last year (sorry to rub sand in the wound).

     China is getting bogged down economically. They are also going to be listening to Fed Chair Powel speak on Friday morning for clues as to potential rate cuts in September. The market has already priced them in!  

     So the trend is negative. The incremental sales should be completed, painful as it seems. There are ways to liberate cash without so much angst. Call your merchant. The bottom line is that this market has not yet found the price that will motivate enough buyers to shore up the price of wheat. Yes, this could be a key low, but its just another low for now, with no sign of a buy signal. Its that old retort: “If you liked it at $5.30, you’re gonna love it at $4.80!   

     One big guess is, “What happens if Russia screws up by flinging tactical nukes, or the crazy Ukrainians find a way to corner Putin and he triggers NATO some other way? What happens to Russian wheat exports? Even a brief interruption of the flow of wheat from the Black Sea would confuse and frighten the global trade for a while. This does not sound like a wheat price negative, but banking on it is not a good marketing plan! At least it is interesting coffee-talk.  And the Israeli-Iranian standstill is not likely to be long-term, but some of Iran’s neighbors are getting irritated and would like the party to be quieter. Kamala who? Watch out, Bubba, here she comes!

     We will see the change in trend when it comes, even if we wake up to a wild headline or two, there is no way to anticipate the lows, nor is there any way but a WAG about when the first real price bounce will come. Relax, enjoy the show!

Stay tuned for more, same time, same channel.

Market Bullets® Thursday August 22, 2024 : Pre-Dawn

     Early Trade Thursday morning was a little, 2-cent bounce following the thumping negative day on Wednesday, as Chicago wheat futures dropped 13 cents on a steady decline through the session on a 45-degree chart angle. The $5.45 low on the new front-month December futures was broken on the close by a cent. That re-set the hopeful 1-2-3 pattern that was grinding its way without any real power. The market is back to sideways with a $5.39 low side tripwire. This microscopic chart dissection is sometimes entertaining, but the reality is that there is no motive to change positions at present. The funds are static, still holding moderately large net short-sold positions.

     The Federal Reserve meeting yielded only a rather calm assessment that the board will “likely” reduce interest rates in September “If” data continues to confirm the position. More information may emerge as Fed Chair Jerome Powell gives a speech Friday morning at the annual symposium of central bankers in Jackson Hole, Wyoming. The Market has already baked in a rate cut, so any announcement deviating from this script would have been thunderous. For wheat traders, the current easing rate market has only to do with a lower opportunity cost of interest for the storage of wheat, along with the weakening effect on the U.S. Dollar; both favorable, but indirect and mild.

     Ukraine has reached the seasonal point where discussions of export caps are normal. Focus is on about 16.2 million metric tonnes as a limit for the marketing year.  

     Global wheat sale movement was quiet on Wednesday, as Tunisia bought 75,000 metric tonnes of soft milling wheat for Sept 15-Oct 20 shipment, most likely of Black Sea origin. S Korea bought 50,000 tonnes of U.S. origin wheat of various classes, including soft white.

     This wheat market is stable, so it is easy to become less than attentive to the daily grind of no-news. Its  understandable, but not the best. It is also easy to keep up with any changes, not just in the wheat trade, but also with global market tone. It really only take a few minutes per day. Stay tuned to this channel. We will see the change when (and not if) it comes and bring it to you.

Market Bullets® Wednesday August 21, 2024 : Pre-Dawn

     Wheat market-oriented news items have become redundant or incremental. The “Information Space” is dominated by U.S. politics, Ukrainian military movements and Iranian/Israeli/Hamas actions. The price chart for Chicago September futures show a grinding low at the end of July, a following nominal high in the 2nd week of August, and what now appears to be an attempt to identify a slightly higher low in the last week. The entire period has lacked enthusiasm for either direction, but will complete a reversal pattern if there is a breakout above $5.52 on the September, which is the equivalent of a break above $5.75 on the  December contract as the September expires soon. Any trading below $5.45 Sep will re-set the entire thickety structure. (Write that down).

     The markets will not shut down due to lack of interest. In due time we will have a factor that has the horsepower to change the tone. Meanwhile, it is essential that we observe Putin’s response to the Ukrainian excursion into Russian territory. There is no off-ramp for Putin, which makes him dangerous. This is not a wheat market factor unless there is a large expansion in the story about two of the largest wheat export sources in the world, but markets do not like such uncertainty, which can make prices wobbly. The same goes for the end-game in Israel. Netanyahu is under tremendous pressure by the global community to make a deal with Hamas. This is not a direct wheat factor, but a period of less stress for global merchants would be price positive.

     The wheat price trend is shifting toward the positive slope, but only if you squint hard and look at it from across the room. The change when it comes will show up on the charts first. It makes sense to keep watching.

Stay cool, stay tuned.   

Market Bullets® Tuesday August 20, 2024 : Pre-Dawn

     Tuesday very early AM trade showed invisible volume and a small price range for the session to that point. The wheat complex lacks a driving factor. It’s quiet…too quiet, like one of those hot mid-summer nights where there is no air moving and even the crickets are trying to sleep.

     News is very light, with odds and ends like;

     This is the 3rd week of incremental fertilizer price declines. Natural gas, representing 60%-70% of the cost of production of nitrous ammonia, had been rising slightly based on an August storage drawdown, but then in the last week flattened out. The main seasonal drivers for Nat Gas are weather-related, so it’s a bit early to anticipate the heating season.

     Germany’s farm co-op association released a lower wheat crop production estimate with a 7% drop from their last estimate.

     U.S. wheat exports as of August 17 for this marketing year stand at 4.584 million metric tonnes, about 26% ahead of last year’s pace.

     The Egyptian supply minister is calling for the global wheat market to offer better terms, because they are the largest wheat importer in the world market. This seems a little whiney, and probably won’t result in any big discounts. This is a good customer reminding the sellers that they are a good customer.  

     The flat-to-negative trend for wheat prices is not surprising anyone at the moment. The energy level of the trade is low, allowing small headlines to look larger. The change will come, so let’s stay awake.

     Noticeables: Diesel has produced a new daily low on August 20 dating back to May of 2023. Gold is pushing out new daily highs again, and has now produced a $485+ per Troy ounce year-to-date gain into all-time highs. It’s a warning light flashing. The U.S. Dollar Index is at a 7-month low on easing interest rate expectations. The Russian Ruble is weaker against  the Yuan and the Dollar.  

Stay tuned, Stay awake.  

Market Bullets® Monday August 19, 2024 : Pre-Dawn

      Monday morning trade in the small hours is showing weakness in Chicago wheat futures, down 3 cents. KC down 2 and Minneapolis HRS down 3-4. Volume is light.     

      Northern hemisphere wheat harvest is roaring into its final weeks. FranceAgriMer released a one-point decline in French soft wheat ratings this week, now 48% good-to-excellent versus 76% last year at this time, which is all but irrelevant, as the crop is 98% harvested.

     Ukraine reports the 2024 wheat harvest finished at 21.7 million metric tonnes, versus 21.6 million tonnes in 2023.

     “Big crops get bigger”. Corn and Soybean crop tour estimates due out this week, August 19 - 22, 2024

     The Russian wheat export tax is increased 9% for the August 21-27 period. This is an “automated” tax calculation that is routinely manipulated according to market conditions and the status of wheat supplies available for sale from Russian origins.

     “WEAT” is an “Exchange Traded Fund” operated by Teucrium. It may be taken that one share of WEAT represents one bushel of Chicago Soft Red Winter (SRW) wheat futures. If interested by this idea, please go to the Teucrium website and learn how grain futures ETFs function, what the pitfalls and advantages are. This is not for everyone, but it is liquid and easy to trade in any stock brokerage account. There is no minimum number of shares that must be traded at most reputable brokers.

     The U.S. wheat price trend is flat to negative. There will be some technical “corrections” to follow the current period of consolidation and chart base-building that may provide some opportunities for decision making, but it will require more power than what is showing on the screens this morning to move the price significantly lower or higher. A break in either direction, above $5.92 on the high side and below $5.14 on the low, could easily produce a 50-cent run…or not. At least there will be trade interest enough to jump on the break. Since we are marketing and not scalping the market, we will wait for trend-change definition before pulling the trigger on sales or price coverage strategies.

     Noticeables: Gold has printed yet another all-time high on Early Monday AM trade in its December futures delivery contract. Diesel continue to show weak price pattern. The Russian Ruble is weakening versus the Chinese Yuan (now the official benchmark exchange currency for the Ruble). 2-Year T-Notes are showing lower interest rate trend for the last week of trade.  

It's trackable…most of the time…so let’s track it!  

Market Bullets® Friday August 16, 2024 : Weekly Closing Update

(Revised* Sunday PM) *Tuesday is rollover day for our Trade Navigator Front Month Continuous Chicago wheat futures charts, moving from September to December delivery contracts, reflecting a jump of approximately 21 cents per bushel based on the storage and interest from September delivery thru December delivery. This means that if you had a short-sold hedge in September contracts and wished to keep the coverage, you would buy Sep and sell Dec, with the 21-cent spread reflecting the market’s consideration of the value of holding wheat in storage into December. This is known as a “normal” market.  

     KC charts rolled-over into Dec as of Friday’s close. The (subject to change) carry spread today is about 15 cents into December. The Minneapolis HRS Sep/Dec spread is 15-16 cents will show on *Tuesday’s charts.

     This “rollover day” is a mostly arbitrary date, in this case set by a specific chart service, intended to allow large traders enough liquidity in expiring futures contracts to do the shift into deferred months without difficulty. For small traders it is not normally a big problem to accomplish a roll right up until the last business day of the month before delivery, in this case the last business day of August heading into the expiring September’s delivery period, during which liquidity (tradability) and delivery against your account (if you are holding a long-bought contract) are potential issues.

     Paris Milling Wheat has printed a new low dating back to march 11 2024. This in spite of ratcheting war risk on the Black Sea. Russian and Ukrainian wheat sales are driven by a desperate need for foreign exchange credits.

     Diesel settled Friday, August 16 directly on both the 560-session and 237-session geometric mean lines. Both descending from previous high points. This reversion to the mean is a common feature of well- established trends of long duration. Diesel is above its early August lows.

     Gold produced a new all-time high price of $2,538.30 per Troy ounce in the December delivery contract. It seems that the small investor is not following gold very closely. It is apparently the sovereign banks of countries outside the U.S. that are originating many of the orders. Perhaps they are not interested in owning any currency that is so influenced by politicians. The current “Real” interest rate in the U.S. is a nominal negative), that is the 90-day T-Bill interest rate is less than the rate of inflation, making the U.S. dollar less attractive and gold more attractive in global markets for purposes of holding reserves.

     It's becoming clear that there is a potential monster corn and soybean crop coming in the northern hemisphere this fall. That is not a direct threat to wheat prices, but it is a very big shadow in the background, maybe enough to prevent wheat from gaining anything more than dimes and nickels for quite a spell. If this continues, the marketing of wheat at a profit is going to take work, which is to say time and attention to detail. This calls for “skull sweat”. We may have a big black swan come down to pick us up and carry us, but that is not a good marketing plan! Call your merchant and become familiar with pricing mechanisms that allow price protection and other strategies to fine-tune wheat sales.

     The trend for wheat is flat. All of the major wheat futures contracts are very near to multi-year lows, but they have been so for several weeks. Without a stimulus greater than mundane adjustments to government statistics or minor harvest delays, we will go on waiting, watching the dollar value, interest rates and other global canaries for macroeconomic indicators, and of course, war in the Middle East or Ukraine. When the change comes (and it will come eventually) it will show in the charts first. We just have to be looking to be aware.

     Meanwhile, stay tuned for anything interesting.

Market Bullets® Thursday August 15, 2024 : Pre-Dawn

     Very early Thursday morning wheat trade in Chicago is seeing a bit of positive, up 8¾. KC Hard Red Winter (HRW) and Minneapolis Hard Red Spring (HRS) are also positive 6-8 cents.   

     Paris milling wheat futures are at new lows dating back to March 2024, as Russian wheat export taxes are low, Russian Ruble is weak and French wheat struggles with quality issues.

     Ukrainian wheat exports are up substantially from last year at this time, but a major Black Sea export terminal elevator owned by Lous Dreyfus in the Ukrainian port of Odesa was damaged by a Russian missile Wednesday. The surprise invasion of Russian territory by Ukrainian forces is causing a re-calibration of what was a static war. The wheat and corn markets will both be checking on this factor in the weeks ahead.

     Corn and Soybeans have paused Wednesday into early trade Thursday after midnight. Not a trend change yet.

     Global international bulk freight rates are easing for Atlantic routes due to supply of available shipping capacity.   

     The wheat price charts are showing a gentle rise back above the 24-trading session mean, about the center of a 78-cent range, with a short-term upside target at $5.56, 15 cents above current trade. This kind of micro-trend management is not much more than entertainment while waiting for a better trend to develop. A slow-to-develop sideways base on the chart pattern is healthy. The longer it is, the more significant a departure from the range will be.

     Stay on this channel, eventually we will see more interesting developments.

Market Bullets® Wednesday August 14, 2024 : Pre-Dawn

            The first tranche of the recent, massive 3.8 million metric tonne tender deal(s) made by Egypt’s General Authority of Supply Commodities (GASC) has appeared as a booking of 280,000 tonnes of milling wheat, 180k metric tonnes from Ukraine and 1010k from Bulgaria, at $241.98 per tonne FOB and $266.21 per tonne CFR on average, per GASC announcement.

If you are going to claim interest in what is happening in the wheat market, you had better be paying attention to what the Russians are doing…

As of August 13th, the Russian central bank’s official exchange rate is about 7% weaker than it was the day Ukrainian units began to enter Kursk, a Russian border oblast on a line northeast of Kyiv. The last time the Ruble traded at this level was May 23rd.

Regular Russian Ruble trading in non-Ruble currencies has been established in the over-the-counter (OTC) market after July 12, when sanctions were imposed on the Moscow Exchange (MOEX) and the Russian “National Clearing Centre”, an agency of MOEX. At the same time, Russia set up the Chinese Yuan/Ruble cross as its official benchmark.

MOEX provides a futures contract on the Ruble/Dollar rate which is used along with open OTR quotes by the Bank of Russia (BoR) to set a benchmark for their official Ruble/Dollar exchange rate. All of this system is cumbersome and expensive, which was the intention of the sanctions.

The immediate effect of a weaker Ruble on wheat prices is to make Russian wheat cheaper in global markets. It is still too early to take this short-term decline in the Ruble as an indicator of instability in Russian economics, but it is a warning light flashing.  

Corn and Soybeans are both drilling down hard into 4-year lows. Optimistic yield projections and a lack of import buyer enthusiasm… The funds are still heavily net short in both markets. When the rally comes it will be interesting, but from what level to begin? For wheat prices, this is a little like driving with the brakes on.

The wheat price charts have not yet produced a “failure” of the sideways channel lows, but the distance from this morning’s trade and those targets is shrinking. In the very early AM trade for Wednesday, August 14th, Chicago is working within 15 cents of the September contract low at $5.14¼, which is the lowest front month trade since August, 2020. KC Hard Red Winter (HRW) is also about to test its long-term lows. Minneapolis Hard Red Spring (HRS) is a little better looking, but in the same low-end challenging pattern. If making an incremental sale, need to raise some cash and looking for a trigger, a break of any of these lows on a closing basis is as good as it gets right now. If considering buying a call option to replace sold wheat, remember that buying a thing because it is cheap does not mean it will not get cheaper. We always like to have an actual trend change pattern in our favor.

Stay tuned, there are some factors emerging.  

NOTICEABLES: Watching the Russian Ruble vs the Chinese Yuan. The Ruble is weakenting. Also watching Gold, nearing the all-time highs once again. Diesel is on an upward run, maybe a case of war nerves.

This stuff is trackable. Let’s track it!

Market Bullets® Tuesday August 13, 2024 : Pre-Dawn

WASDE report:

* USDA’s All-wheat production was reduced 26 million bushels to 1.982 billion bushels versus the average pre-report guess of 2.014 billion bushels. – Price supportive.

* Winter wheat production increased 20 million bushels from last month to 1.361 billion bushels.

* Other Spring Wheat production fell 34 million bushels to 544 million versus pre-report ideas at 579 million – Price supportive.

* Durum production totaled 77 million bushels down 12 million bushels from last month and below the range of estimates of 80-95 million bushels – Price supportive.  

* U.S. 2024/25 ending wheat stocks reported at 828 million bushels, down 28 million from last month, and below pre-report ideas at 861 million bushels – Price supportive.

* World ending stocks totaled 256.6 million metric tonnes, slightly lower than last month’s 257.2 Million tonnes and 400,000 tonnes below the average estimate – Price supportive.

* Global Production of wheat is projected to increase 3.5 million tons to 1,060.6 million primarily on larger production for Ukraine, Kazakhstan, and Australia that outweighs lower production for the EU and the United States. – Price neutral to negative.

* Weekly 6-state spring wheat conditions were down 2% from last week at 72% good/excellent. Washington shows the weakest spring wheat crop at 17% Good-to-Excellent. Idaho spring wheat condition rated 63% Good-to Excellent.

* Spring wheat harvest is 21% completed, with Washington at 32% and Idaho at 17%

     The WASDE report did not provide any upward steam for wheat, despite the advance trade guesses being mostly too heavy. The buyers are just not satisfied with a few production number adjustments. They want a larger, more pervasive factor that has not yet emerged. The trend for wheat prices is not inspiring for the anxious seller of newly harvested wheat. Russia is reflecting this attitude with reduced export taxes on wheat, as they continue to dominate the global trade (Imagine a Russia that also controls the Ukraine’s rich wheat ground – too OPEC’ish for my taste…) So we wait. The range boundaries remain as alerts for the next price leg, upward or down.

     Meanwhile, for HTA’s and some other strategies, the carry is pretty good in Chicago, at 23 cents or so in the September thru December spread, and 19 cents from Dec thru March. KC is weaker, at 14 between Sep and Dec, and Minneapolis is at 19 Sep-Dec. The September contracts are about to be rolled into later months by the trade, so the deferred spread will be catching more volume. Call your merchant for details on these and how to use them to enhance an otherwise moribund wheat price.  

     Tighten up the marketing plan. This is a year when thoughtful and deliberate wheat marketing efforts will pay back the time expended.

Market Bullets® Monday August 12, 2024 : Pre-Dawn

     Rolling out of September to December futures: The Weekly and Month-to-Date Summary Table (above) now reflects the quotes for delivery months for each market according to trade preferences. Currently the wheat quotes all are for September delivery contracts, including the PNW cash quote reflected on the Weekly Chicago SRW chart. On August 15-19, all of the “front month continuous” wheat futures charts will roll to December quotes. The PNW cash quote will remain on September.

     Monday morning World Ag Supply/Demand Estimates (WASDE) report due out at 9:00 AM Pacific Time/11:00 Central. Pre-report aggregate trade guesses show:

*The average All-Wheat production guess at 2.014 billion bushels versus 2.008 billion in the July report. *Other spring wheat production is seen at 579 million bushels versus 578 million July.

*U.S. All Wheat ending stocks are projected to come out at 861 million bushels for 2024/25 vs. 856 million in July. 

There is always the potential for surprises, but the August data release is rarely exciting for wheat. If the trade guesses are close, the market will likely pause to review and then move on shortly after. The trade is much more focused on corn and soybeans at this juncture.

     The most recent CFTC Commitment of Traders (COT) Report says the funds remain net-short-sold significant wheat futures positions, but have slightly reduced their positions over the last week. This is still a storage of buyer energy that will eventually get triggered, but it will take something more than what is on the wires at midnight Monday morning.

     An excellent roundup of current supply price factors produced by Cory Christensen at Northwest Grain Growers on Friday morning: 

“-US wheat production rebounded significantly this year.

-Canadian volumes expected to be near record.

-EU crop down significantly due to excessive rains. Sizeable carryover from last year keeping markets tame. [Some northern France elevators are unable to accept wheat deliveries, as they are full.]

-RUS winter wheat crop shrunk considerably after extreme dryness, but a rebound in spring wheat areas brought crop to more of a trendline average.

-UKR crop is smaller, but not beyond what they can still handle and ship.

-Turkey & Pakistan recorded a massive wheat crop and banned imports.

-India was thought to be an importer of wheat this year given some production woes, but the story died out a few months ago after no action was seen.

-Australia's crop in pretty good shape and expected to be about 29MMT, or the 5th largest on record (very early though)

-Argentina's crop has frost warnings happening for next week and is in a state of mildly uncomfortable dryness.

-China...who knows what China's crop is. They've been buying AUS wheat for a while and little bits from the US and Canada, but not in quantities to suggest they're in any sort of trouble.” – Thanks, Cory!

     The Chicago September wheat futures delivery chart has been floating sideways in a 40-cent range since mid-July, not a care in the world. Plenty of wheat for sale, buyers lined up, all patient and willing to pay. Taking wheat, copper, interest rates, currency markets, energy prices, etc., anxiety is certainly present, but not unmanageable.

     The Chicago downward move tripwire alarm is a trade below $5.14 in the September, or $5.39 in the December futures. On the upper side of the narrow sideways channel we have been following, the upward move alarm is above $5.56 in September contracts, or $5.81 in the Dec. These are nominal ideas of price levels that have proven to be boundaries for the recent range, and are intended only as alerts for marketers interested in following the wheat market’s behavior. We at MarketBullets, LLC are providing them as examples only. The application of this information is not intended as trading advice, and as such we do not accept any responsibility for its use.  

     Rant: The politicians are behaving like they are on the pro-wrestling circuit, flinging chairs and bellowing, with exaggerated heroes versus wildly melodramatic villains. The fault is not with the candidates. They are merely delivering what the fans came to hear and see. Most of what is on display is a distraction from reality. The poisonous, foolish hyperbole that is the staple of each day’s political wailing and gnashing of teeth is overplayed. Our country is running on half-power, with those who benefit from division and emotional turmoil the only winners. I tell the kids, “If you find that what you are reading, viewing or hearing is generating anxiety, anger or depression, you are being manipulated! If it seems too horrible to be real, or too good to be true, it is of no value, and should not be repeated. Make no assumptions about what is true or false. The greatest lies are always mixed with some truth. If you cannot honestly verify what you encounter, disregard whatever is being put on you. You know who to consult! Then listen to your own quiet voice of reason, as you think for yourself.”   

MarketBullets® Friday August 9, 2024 : Pre-Dawn

     The August World Ad Supply Demand Estimates (WASDE) is due out on Monday morning August 12th at 9:00 AM Pacific Daylight Time/11:00 Central. Early pre-report trade ideas show expectations for a modest increase over last month’s wheat ending stocks figure of 856 million bushels, up just 3 million (+.35%) to 359. The market reaction to these reports is mostly quick calibration adjustments based on the accuracy of the pre-report guesses. Unless there is a surprise exceeding the range of those guesses, the report will pass quietly.  

     The French wheat crop is now estimated at 25.6 million metric tonnes, the lowest since 1986. France is normally the largest wheat producing member of the European Union at about 35% of the total, followed by Germany around 20%.  

     USDA’s weekly report shows net U.S. wheat sales of 274,000 metric tons (MT) for 2024/2025, down 4% from last week and 23% below the prior 4-week average, still ahead of last year’s pace by a respectable 34%.

The Russian Ruble is reflecting short-term weakness, as inflation is increasing in Moscow. This could partly be a result of late observations of Ukrainian incursions into Russian territory. The longer-term trendline is toward very gradual Ruble strengthening. This bears watching.

     In a disturbing article from Arlan Suderman at StoneX: “We currently spend an estimated $1.797 trillion on Medicare / Medicaid, $1.461 trillion on Social Security, $915 billion on Defense, and $913 billion on servicing our debt each year. Combined, that totals $5.086 trillion on these non-discretionary budget items, which exceeds annual tax revenues of $4.981 trillion. So, we’re already at an annual deficit, and we haven’t even paid yet for Homeland Security, or the multiple discretionary funding programs, such as farm programs, food programs, education programs, etc. The money that we used to spend on the discretionary programs is now going toward servicing our debt, so that we must borrow money to sustain these other programs.” Click <here> for the whole piece. Makes me wonder who is driving this bus?

      The wheat market chart pattern is vigorously doing nothing, but the longer this pattern lasts, the more useful it becomes. Friday early morning trade is up about 6-8 cents, but still at or below Tuesday/Wednesday highs, and still 10-15 cents below the price level that would trigger market attention. We are watching Chicago September contracts at $5.56 as a “tripwire”. The big speculative funds that are still holding relatively heavy short positions see no present motivational technical or fundamental factors to cause significant position changes. The world is well aware of that the weather risk leading to wheat crop shrink in the northern hemisphere is past its peak and will be narrowing every day from here to the end of wheat harvest. The coffee-talk is drifting toward Ukrainian incursions into Russian territory, or what Iran’s retaliation for damage to the guest quarters at the Tehran government guesthouse will be. There is a temptation to buy wheat here, and the risk is obviously lower than it was a month ago, but it would still not be in harmony with the trend. Prudence says, “Look for the breakout, it’s only a few cents away, and even then be ready to back off.”

This is a trackable thing. Let’s track it!     

MarketBullets® Thursday August 8, 2024 : Pre-Dawn

     Apparently Egypt thinks this is a reasonable time and price to buy ahead, in view of their extra-large tender for 3.8 million tonnes (or so) of wheat this week. The deal will cover an October to April shipment period, with payments along similar (270-day) lines, extended far beyond their normal 4-5 month practice. The financing arrangements are likely to be an important feature of the purchase. Russia is expected to dominate the business. Intuitively it seems like it would be attractive to Mr. Putin.

      Heading into Thursday’s session in the very early hours, Chicago September was up a couple of cents, trading quietly. The price range of the session was entirely within the previous day’s action. KC Hard Red Winter (HRW) was also up 1-3 cents as was Minneapolis Hard Red Spring (HRS).

     The trend is still inside of a downward sloping channel, but with no new lows since July 29th  setting up a sideways pattern that may allow a rise to develop. A useful tripwire price for a short-term price bounce would be a close above $5.49 in Chicago’s September contract. On the downside, a trade below $5.14 would likely attract seller’s attention. Anything inside of these boundaries would be inconsequential.

Stay tuned, as the trade is tuned.

MarketBullets® Wednesday August 7, 2024 : Pre-Dawn

     The French soft wheat harvest will struggle to meet milling quality standards for protein. Soft wheat harvest is expected to accumulate to 25.2 million metric tonnes for 2024/25, some 27% below their 5-year average and lowest in several decades. See <Paris Milling Wheat> price chart. On average, France produces about 27% of the wheat produced in the EU.

     The 6-state U.S. Hard Red Spring (HRS) crop condition as of August 4th held steady at 74% Good-to-Excellent (GEx), the best overall HRS condition as of this week since 2018. Washington State has seen a hard decline in HRS crop condition, now at only 16% GEx, crowding the “Fair” category at 65%. ID is far better at 69% GEx. 10% of the HRS crop had been harvested as of the 4th.

     Egypt, always an aggressive global wheat buyer has issued a 3.8 million metric tonne tender this week, to be shipped over several months forward.    

     The Canadian spring wheat crop is shrinking from hot and dry conditions. While this is no surprise to the market, it is an ongoing bit of pressure that is part of the reason for wheat prices to be testing the upper technical boundaries of recent trade.

     Australian wheat is receiving enough regional moisture to push crop forecasts to 39 million metric tonnes, up from 25 million.     

     The Chicago wheat futures as bellwether continues to display that “toe-dipping” pattern, with intra-day lows well below its closing settlements. The September contract has clawed its way back up to the July 25th price range, 10 sessions ago. The imminent upside challenge point is the high of July 19th at $5.56¼, which is also the low of June 26th the bottom of the air-pocket 20-session collapse that started on May 28th, an inflection point that was re-visited on July 10th. So, to summarize, there is a technical challenge about a dime above Wednesday’s early morning trading range that could trigger some short-covering among the trading funds. The reaction of the big specs will depend at least partly on how vigorous any breakout of that level might be.

     The three  (four if we count Paris) major futures contracts are all setting up some narrow trading range bases. We will have a chance to measure the next phase of price movement by either a breakout upward or a failure of the range lows, now about 30 cents below current trade.

     We are engaged in wheat markets that are not being driven by fluctuations in large, powerful fundamental factors. Wheat price movements are being measured in smaller price increments, with less than 50-cent moves in either direction as the mode. This is probably going to be the environment with which we must live for the duration of northern hemisphere harvest into a brief pause and then the southern hemisphere crop offtake. Marketing for the balance of the calendar year will require more deliberate and calculated goals, as trends become more fragmented and unreliable.

     The now two-plus year-old wheat negative price trend has paused in its 8-dollar per bushel slide, and is now under review. It is reasonable to observe the short-term market moves to gauge tone and intensity.  

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday August 6, 2024 : Pre-Dawn

     Chicago wheat September futures entered the Monday daylight trading hours with minus 20 cents and a dismal attitude, but shortly after 5:24 AM PDT the price began to rise and never looked back until the close at plus 1½ cents for the day, a full 20 cents above the lows. This makes a skinny candle on the charts that we like to call a “toe-dip” pattern, where the market tests some low price level and recoils quickly. The week ending last Friday displayed at least 3 of these daily session patterns, suggesting that every time the price reached toward the lows, there were buyers discovered within 3 cents of the 4-year lows.

     Tuesday’s early morning trade is holding the Chicago September delivery contract about 3-4 cents below Monday’s closing settlement. KC off about 4, and Minnepolis HRS down less than a cent in the September, but minus 3½ to 5½ in the deferred delivery slots, reducing the carry into December and beyond, a suggestion of rising nearby demand compared to later demand.  

     The big trading funds are still holding heavy (if not record) in grains. These money-movers are alert to anything that threatens already profitable trades. One thing that can trigger them to cover those shorts is a “death by a thousand cuts” kind of price pattern, which we are seeing now. That event would be more like “How high is the water, Mama? The decision to move takes time.

     If there is an emerging factor right now, it is quality/protein. Bigger than average crops in the high protein country usually average lower protein, and there is definitely moisture trouble in some parts of paradise. This is usually not a direct price mover, but it can skew the high-grade wheat supply distribution and make the end-users bid up for the good stuff if it gets serious enough.

     The futures trend for wheat is under construction, with a sideways coiling pattern that will be the measuring point either way, once the driving factors settle who will lead, up or down. The price trail is likely to be long and winding from this point, unless a black swan (war?) lands on the pond. Marketing plans end up being the saving factor here, where there is coverage against downside risk for unsold wheat, a thoughtful sales plan, with maybe designated incremental sales with a matching criteria for execution(s), and consideration of risk. There is always a way to speculate, almost irresistible. So scratch that itch, but find a way to do it that does not have big trap doors under the path. In our experience, those traps will take your cash out of your pockets much faster than the profit rolls in.

Stay tuned here for more information. Good hunting!

MarketBullets® Monday August 5, 2024 : Pre-Dawn

     Wheat is starting off the 2nd week of August 2024 in a slumping pose, with Chicago erasing last week’s gain, KC down a dime and Minneapolis HRS off 3½ cents.  

     The only wire items in play are oriented toward the next few steps expected from Iran and Co, as they telegraph a coordinated attack on Israel and possibly some U.S. military assets in the region. The Secretary of Defense has ordered additional Naval ships equipped with missile interceptors. More air cover in the form of F22 jets are also moving to the region. While the emerging conflict is gaining definition and strength, the direct effect on wheat prices has been minimal to date, but markets do not like uncertainty and wheat is no exception. The world is drawing in a big breath. Decisions are going on hold. We need to see how far Iran is willing to go.

     The wheat price charts have just a little lift remaining from recent weeks, but the character of the price pattern shows weakness. Urgency is not part of the mix at the moment. Steady.

     We are watching several futures contracts for signs of distress or denial. Interest rates, gold, copper, diesel, and currency values are decent indicators of global market stability. See links in the paragraph from Friday.

     Stay tuned. There is always more.

MarketBullets® Friday August 2, 2024 : Close and Weekly Summary

     The U.S. Dollar Index is at its lowest since March, largely reflecting lower interest rates and an anticipated Fed rate cut pending. The top statistic is higher unemployment. A mild wheat export price positive.

     2-year Treasury Notes closed the week at the lowest interest rate yield (3.875%) since the first week of April 2023. The highest recent rate traded was in April of ’24 at 4.993%.  At this point the market is the prime mover and not the Federal Reserve Committee. Lower rates make wheat storage costs less.

     Diesel futures closed the week at its lowest daily closing settlement since June 5th this year, which was itself within a few cents of the lowest NY Harbor wholesale price for diesel since May of 2023. The price pattern has reached and exceeded the long-standing 78.6% downside ratio target. This may be taken as good news for diesel users, but it may also be taken along with falling interest rates as an economic indicator of a slowdown. We are also watching the Copper futures contract which is often a decent indicator of global economic health, as copper is so elemental to so may manufacturing and construction businesses.

     Another new all-time high in the Gold December delivery contract at $2,522.50 per Troy ounce. Threats of war and pending economic slowdown plus sticky inflation (lower domestic value for U.S. Dollar as well as a fading global dollar price). There are rumored to be some large central government banks buying gold. All of this is heady talk for a wheat trader, but the background has to be carefully painted into the picture to have the small stuff make more sense.

     Wheat finished the week in Chicago up 15 cents, although it did not feel that way in the gut. The September futures contract has done only the very basic base-building behavior so far. There is scant argument for buying wheat, and the emotional approach has not paid well over time, leaving us with a extension of the patience test. The trend is still lower, defined by a nominal new long-term low, although without “vigorosity”, as the week turned green as it wore on. At least it is still alive.

     KC Hard Red Winter (HRW) wheat harvest is very nearly complete, and the price at the Kansas City Board of Trade is working on a base very similar to Chicago; a new long-term low followed by a 16¾-cent positive weekly close. The odds of a follow-thru on Monday seem reasonable.

     Minneapolis Hard Red Spring (HRS) printed a new long-term low two weeks ago, and then successfully tested that low in the week just ended, a little more advanced base than the other two major U.S. futures contracts. All of these patterns will need work in coming weeks. Meanwhile, the best we can do is “hide and watch” as Cousin Terry used to say.

MarketBullets® Friday August 2, 2024 : Pre-Dawn

     The market’s eye is fixed on the base-building pattern that is being established in Chicago September futures. KC is also working on a measuring point low. Minneapolis Hard Red Spring (HRS) has larger swings, but is in the same process. The series of lower highs followed by lower lows over the weeks since the late May high-point of $7.67 ($1.79 above current trade in HRS) is the classic definition of a down trend. The opposite pattern takes time to generate.  First step is a significant low…followed by another low just above that signature low. So far, HRS has fulfilled these two steps. Any trade below that first long-term low is a re-set. KC has only a single low to its name, and cannot yet apply for change in trend direction. Chicago is in the same category, so its HRS in the lead by a nose, but no clear change is yet to be seen.

     Ukraine wheat exports continue to decline, partly due to hot and dry conditions on maturing wheat, and partly on difficult farming conditions due to lack of fuel, parts and personnel.

     Conditions for maturing spring wheat in the northern tier of states and Canada are still good. Moisture is in the forecast.

     Conditions for U.S. corn and soybeans are also good.

     Wheat has been grinding sideways for the last week, poking at the long-term lows without enthusiasm. The market tone is subdued, and coffee-talk subjects have been thin and repetitive on steady volume. This kind of market lets option prices shrink. Corn and soybean price patterns are very similar, close to long-term lows with a lack of conviction.

     The orthodox definition of the price movement is still a negative slope. Stay on marketing plan, including any planned incremental sales on schedule. Use the option strategies. Call your merchant for help with these. Make them explain and repeat every aspect of the most appropriate contract(s) until you are intuitive with it. Its ok to repeat. Even they have to think deliberately about this stuff to prevent errors, and they want you to be confident about your decisions.

     Meanwhile, watch the pattern and market noise level for changes in the wind.

Stay tuned.    

MarketBullets® Thursday August 1, 2024 : Pre-Dawn

     FOMC left its target Fed Funds rate unchanged but indicated the possibility for a rate cut at the September meeting.

     New all-time high for Gold December delivery contracts at 2,502.80 per Troy ounce on August 1, 2024.

     There is a general slow trend toward wider overt conflict in the Israel/Iran/Lebanon/Syria region, triggered by the recent reaching out and tapping Hezbollah and Hamas leadership by Israel. The potential disruption in global grain markets due to regional war in the Middle East has greater implications for crude oil and for customers who buy wheat from Russia, but it could be part of a trigger for short-covering. There are many innocents in harm’s way, all of them good, wheat consuming folk. In the long run not healthy for markets.

     The corn chart is really nasty, with a 3-year+ decline from $8.00 to $4.00 not showing any tendency to base. The global price of corn as a factor in the price of wheat is correlated. Any further erosion in corn prices will at least have a dampening effect on wheat. The psych magic number is $4.00 per bushel for corn, under challenge as this is written. The low in 2020 was $3.14.

     The trendline for wheat is not showing any strength. A sideways base, maybe. It will take something large to trigger a move above the first target at about $7.20 in the front month of Chicago Soft Red Winter (SRW) futures. The first ratio target on the upside is just above $8.00. These targets require $1.50 or more for the “low hanging” fruit, and at least $2.70 for the tough one (a 38% retracement of the entire decline from the spring of 2022 highs provided by Mr. Putin). This kind of review is always crazy-looking, but these markets are capable of some crazy stuff…

     Don’t let the charts mislead! Incremental, boring, disappointing sales all along the way still beat the “hold on for higher prices” strategy over the long road. There are strategies that can help liberate cash and hold onto upside potential without some of the costs. Call your merchant.

Stay tuned. At least its not boring!      

NOTICEABLES:

     Gold as an economic indicator printed new all-time highs in early trade Wednesday, July 17th. This is usually a fear-based trade, especially in light of American political events and a jockeying for global positioning. Even Putin is holding his cards tightly ahead of this fall’s events.

     The US Dollar Index is very steady, sitting right on top of the central indicator of a flat, 20-month-old range sideways. Interest rates are easing downward in the 2-year Treasury Notes.

     Diesel prices have created a “head and shoulders” pattern and have broken below the “Neckline” of said pattern, pointing to a short-term target about a dime per gallon lower. This kind of thing sometimes takes quite a while to appear at the pump, but the trend is satisfying to see.

     Natural gas prices are reflecting no buying pressure, and are trading just above an often-validated price low zone.

     The market hive seems calm for the moment, even with hot-spots and political rhetoric running in high gear. If we are diligent, we will notice oddities that may give clues of a shift in pattern.

Stay tuned, there’s more to come…

MarketBullets® Wednesday July 31, 2024 : Close

No changes in wheat trend. The daily high/low range for Wednesday put in highs and lows outside of Tuesday’s trade, but opened and closed well within Tuesday’s range. Chicago Soft Red Winter (SRW) is dragging on the bottom of the stream, while KC Hard Red Winter (HRW) is closing consistently above its lowest close, and Minneapolis Hard Red Spring (HRS) is technically stronger on the charts, having not produced a new low since July 17. This is intuitively what a consolidation low should look like. This is not a buy signal, but is an essential pre-cursor pattern in the process of creating a base from which to measure price strength later. Patience, Precious!

New all-time high in December gold delivery contracts at $2,496.60 per Troy ounce.

Diesel prices jumped up to $2.45/gallon wholesale delivery to NY Harbor from $2.37/gallon two days ago.

2-year Treasury Interest rates are trending slightly downward, now at rates similar to those of early Feb’24.

Russian Ruble is stronger in global markets than it has been since late June, a mildly price-positive factor for wheat exports from Russia.

MarketBullets® Wednesday July 31, 2024 : Pre-Dawn

     Tuesday’s entire trading range in Chicago was within Monday’s range. Wednesday’s Pre-Dawn price range as of 1:00 AM PDT was within Tuesday's daily range. Volume of trade is declining slightly. All of this is characteristic of a market without conviction.

     Month-end is usually a point at which we see a bit of trading fund position adjustment, in the case some short-covering to pin some profits to the books. It has been quiet, reflecting no motivation among the big specs to take money off the table.  

     Minneapolis Hard Red Spring wheat futures hit a low on Tuesday just one cent above its 2-week old

     Lots of small global wheat tenders. European Union statistics show soft wheat exports in the first month of their new marketing year at 1.85 million metric tonnes, down1.14 million tonnes (about 38%) from last  year’s same week 2.99 million tonnes.

     Global fertilizer prices have been sliding lower since late June.

     8-10 Day Precipitation from NOAA shows upper Midwest / most of corn belt receiving moisture.  

     The trend is meh! New lows and more new lows, but always just a toe-dip and on weak volume. The market is not in the mood to blast through the bottom and blaze any trails. Country sales are slowing, as the price is at or below average gross production costs. Eventually there will have to be a motivation to move that wheat.

     We will see it and comment on it when the change comes. Meanwhile, stay alert, drink water, stay tuned to this channel.

MarketBullets® Tuesday July 30, 2024 : Pre-Dawn

     In every major wheat-production region of the northern hemisphere, spring wheat crop condition has declined in the last 2-4 weeks. Canadian spring wheat conditions have been declining, with Saskatchewan off 14% in the last couple of weeks to 76% good-to-excellent (GEx) versus 34% last year this week. Alberta shows a drop of 13% GEx to 60% versus 45% LY.

     In the U.S. Hard Red Spring states, the conditions have also declined. Idaho is showing 63% GEx vs 74% two weeks back. Washington is at 32% vs 48% for the week ended July 14. The 6-state average is 74% vs 77% two weeks ago. North Dakota is definitely the state holding the average together, with 81% GEx vs 82% in the same time frame. Meanwhile, U.S. winter wheat harvest is in its last 20% to go, mostly in the PNW and Montana.   

     All of this North American crop condition data is being carefully noted by the trade, even as France is seeing an 8-year low in crop condition at 50% GEx vs 78% a year ago, while harvest there has reached 41% completed. Other regions are also seeing at least some shrink of wheat crop expectations. Russia, which had already cut estimates of their milling wheat crop, has begun to re-inflate their estimates, all of which are substantially below last year’s crop size.

     In the far background, Australia has managed to pull a rabbit out of its hat, with timely rains following a dry spell earlier this season. They are currently estimating a crop of about 29 million metric tonnes, up about 3 million metric tonnes from last year.

     The charts do not provide any suggestion of a buy signal. Tuesday very early trade in Chicago saw September delivery contracts trading down 11 cents, putting the week-to-date figure at -3¾ cents, trading just 6 cents above Monday’s 4-year low. KC Hard Red Winter wheat futures printed another new low Tuesday AM, while Minneapolis Hard Red Spring (HRS) made $5.78¾, just 3½ cents above its long-term low. New lows are very often followed by more new lows, as the driving factors behind the move continue to play out (Harvest, even as crops shrink). We are in a price zone that has no recent history by which to steer.  

     There are few players in this wheat market that are willing to step in front of this train with money in-hand. Eventually there will be a pause, but it will take more than a hunch to dislodge the funds from their net short positions.

     For a marketer of new crop wheat, especially one that still has old-crop in the bin, this kind of price pattern is a tooth-grinder, setting up a shrug of the shoulders and a determination to hold for better prices. That is the bane of many a producer. Hopefully, some incremental sales have been made along the way, but if not, and cash is required to prevent borrowing at expensive interest rates, let go a little. If you must, you can consider buying call options to cover the sale and hope the market rebounds before they expire. The clock is not your friend in this. It’s a true speculation and not for everyone, but if it helps you sleep, it may be worth it. Remember that an at-the-money call is going to have close to a 50% delta (more delta will cost more), which is just the proportion of the price change it will gain of the actual price increase (or lose of the actual price decrease), at least for the first few cents of change. Another way to look at it is an at-the-money call starts out with price coverage of just half of the bushels in a regular futures contract of 5,000 bushels. Ask your merchant. There may be no rebound in time to make those options work in your favor, but it does work sometimes.   

     The trend is downward. Intuition will yell that “it has to turn upward soon”, but that has been proven to be a terrible way to make a trade decision. Stay on plan. Stay tuned in.  

Market Bullets® Sunday July 28, 2024 : PM for Monday July 29 Session

     For the week just ended, the wheat complex gave up 20-26 cents per bushel except for PNW white wheat, which was only down a nickel on the week. The buyers are relaxed and have recently shored up their shipping schedules. There is no driver toward adding new wheat purchases with the market aggressively challenging the multi-year lows again. It’s interesting to put on your wheat-importer shoes and take a look at what you would likely be thinking of the price trend if you were responsible for preventing food riots.

     The kick-off for the week on Sunday night into the wee hours of Monday is weak soup. Chicago is off 4¾ cents after midnight and has printed a shallow new long-term low, the 4th trading session in a row to do so. Minneapolis Hard Red Spring (HRS) is down 2 1/2, while KC Hard Red Winter futures are up just a tid (+1/4). Paris milling wheat – the bellwether of the Black Sea – was down the equivalent of 8 cents per bushel on Friday, with pre-opening indications pour Lundi unchanged to a little higher.

     The carrying charge reflected in the Chicago SEP-DEC futures (+$.25 carry over 3 months) or the DEC-MAR’25 (+$.21 carry) both are reflecting the market’s willingness to defer sales and delivery by paying storage and interest over either 3-month period of $.07 to $.08 per bushel per month (numbers given here are approximate and are presented as examples of spreads only. Applying trade decisions should be based solely on the reader’s opinion and applied real market data). When the market speaks this way, it is suggesting that there is enough wheat available nearby already. Ask your merchant about what this could mean for your marketing plan as we continue to grind out low prices.

      This market reminds me of those “two-a-day” football practices that were actually three-a-day in the humid days of late summer. Those wind-sprints…sheesh! But we always knew we were getting stronger!  

Market Bullets® Friday July 26, 2024 : Pre-Dawn

     This is the time of year to expect statistics to reflect crop size shrinkage, as wheat crops mature or are harvested. So far the adjustments have been minor.  

     We have erased all of the higher prices that traded on Russian invasion of Ukraine as if there were no disruptions of shipments from Ukraine at all…business as usual. Since that is not entirely true, and the basis for disruption of wheat production in Ukraine includes scarcity of parts, fuel, fertilizer and personnel, not to mention the fact that many good acres of farm production are near the front lines of conflict in eastern Ukraine. This is not a buy signal, but it suggests that the current lows in wheat may be setting a longer-term pivot point.

     The market is operating on very light wire-news flow, dominated by spring wheat weather and crop tours. The trend charts remain in a formal “downtrend” configuration, but a consolidation is clearly underway. Even a failure of recent lows dating back to 2020 will not likely trigger a large, sustained selling response. This is a test of the marketer’s patience, or at least it is allowing an operational focus on the last 25% of winter wheat harvest. The importer desks are watching closely, but they are not anxious (yet).

     The futures markets are called “futures” because they function on future events and probabilities. At present wheat prices are at a fair-value range that implies ample supplies and stable demand patterns for the foreseeable future. The big factors are Spring crop conditions including Canada and weather threats to maturing corn and soybeans, followed distantly by southern hemisphere crop development…not much for coffee-talk.

Its trackable. Let’s track it!  

Market Bullets® Thursday July 25, 2024 : Close

     Thursday’s wheat markets were weak, but produced no new sell signals. Chicago lost a dime in the September futures. KC HRW and Minneapolis HRS were both down about 7 cents. PNW white wheat slipped a nickel in the Portland/Coast market. Paris Milling Wheat futures were off the equivalent of about 8 cents per bushel. 

     The last day of the Spring wheat/Durum crop tour concluded Thursday with the final total weighted average all-wheat yield estimate of 53.8 bushels per acre (bpa) of 257 fields checked over the three days. Last year’s all-wheat over 343 fields was 47.1 bpa.

     The final tour average spring wheat yield estimate was 54.5 bpa, versus last year at 47.4.

     Average durum on 18 fields was 45.3 bpa versus last year at 43.9 bpa.

     Over the last 29 annual tours, the highest overall tour yield for HRS wheat was 49.9 bpa in 2015, and the best durum number was 45.4 bpa in 2016.

     The annual tour is sponsored by the Wheat Quality Council, a Lenexa Kansas-based Industry organization founded in 1938 by a wide group of millers, bakers, grain trade, seed firms, state wheat organizations and individuals to improve the value of all U.S. wheat classes.  

Market Bullets® Thursday July 25, 2024 : Pre-Dawn

     The Day-1 (Tuesday) Wheat Quality Council’s Spring Wheat and Durum crop tour found Hard Red Spring (HRS) average yields of 52.3 bushels per acre, versus 48.3 a year ago. The tour ends Thursday in Fargo, ND.  

     Day-2 of the Wheat Quality Council's Spring Wheat and Durum Tour summed up on Wednesday with a spring wheat yield estimate based on 99 fields sampled at 53.7 bushels per acre (bpa) versus 45.7 bpa for 2023. Durum averaged yield of 17 fields was 45.6 bpa vs 40.5 last year.

     The tour has not revealed any surprises, nor any substantial damage from Fusarium or scab.  

     Paris milling wheat futures commitment of traders report in the week ending last Friday, July 19 showed a rise in the net-short position in wheat futures, given greater reductions in long-side than short-side positions. Overall spec positions were reduced.

     Canadian wheat crop estimates agree with USDA figures. Australian estimates are increasing due to recent, long-awaited rains.

     Interest rates on 2-Year Treasury Notes have declined from 4.99% in the last week of April to 4.33% today. This move may not have consequences for wheat harvest prices, but the short-term trend suggests an easing of interest costs, a positive development for business down the road a bit.

      Most of the small information floating about is either inconsequential or negative in tone for wheat prices, but the hard decline since the last week of May has slowed farm sales and taken some of the steam out of the fund selling, although the net short-sold position in wheat futures is still heavy, if not historical in size. Corn and soybeans are dominating the wires with their flowering stage of development as the background for record net short-sold positions in both categories. Any serious weather development could be the spark that sets off a short-covering rally there, so the tension in the trade is higher than normal.

     U.S. winter wheat harvest is approaching its final stages, and the spring wheat crop tour is going to put some powerful fundamental numbers on the market. Crop numbers can only shrink from this point.

     The wheat futures lows printed only 7 trading sessions back are hot triggers for selling energy if they fail as support. That is only about 20-25 cents below present trade in Chicago. For KC Hard Red Winter (HRW), its about 20 cents, and for Minneapolis Hard Red Spring (HRS) it’s about 35 cents. These tripwires can be useful, as they are not expensive to maintain and they are intuitively powerful.

Stay tuned for more…eventually.

Market Bullets® Wednesday July 23, 2024 : Pre-Dawn

     Tuesday’s session gave us little guidance for any changes. The market is waiting for new input.

     The recent Hard Red Spring (HRS) wheat price rallies are based on global forward concern for protein needs. An anticipated large spring wheat crop resulting from good moisture usually leads to lower protein averages across the board. Everybody in the protein wheat business understands this, so this is just a reminder to watch the scales. A high-pressure ridge is dominating the north American spring wheat zone for at least another week, pushing the crop into rapid ripening.

     The US Wheat Quality Council's HRS/Durum tour started Tuesday. All wheat markets will be observing this tour intently. The starting gate is in Fargo, ND, where 40 or so crop scout volunteers from across the spectrum of wheat people have gathered; from producers to end-users alongside media, insurance reps, academics, guvmint folk. They are on the alert for effects of excess moisture.

     It’s the corn and soybeans that have the massive, record-sized net short positions in the hands of the big spec community, according to the CFTC’s Commitment of Traders Reports. That heavy position is fuel in the tank for short-covering runs. It may seem like fund money movement is similar to weather as a market factor, but it is not a fundamental force. The funds tend strongly toward technical-quantitative driven decisions, with momentum, volume, chart patterns…  The silicone-based mind can grasp these as guiding factors. This creates opportunities for us carbon-based entities if we have observed carefully. In this environment, we see the phrases, “short-covering” and “momentum”. The common qualities of a short-covering rally are short duration and high intensity. They usually only end after extending past expectations enough to trap unwary late buyers, followed by a rapid regression to the central indicator (statistical mean). All of this is merely to remind marketers to perceive these common rallies as short-term only, taking advantage when the marketing plan applies to make incremental sales.   

     It may be a dull period in grain futures, particularly for Wheaties, but this is a good time to review the marketing plan (That is if you are not sitting on a combine all day, leaving only enough time to shower, eat and pretend to watch TV for a few minutes before bed).

This is a trackable thing. Let’s track it!

Market Bullets® Tuesday July 23, 2024 : Pre-Dawn

     Russian wheat harvest is counted as 38% in the bin. Evidence of previous weather damage is showing.

     U.S. national winter wheat harvest progress is pegged at 76% done as of July 21, ahead of the 5-year average by 4%.

     PNW white wheat harvest shows WA at 10% versus 16% average. OR 35% vs 26% normal. ID 7% vs 9% average.

     WA spring wheat condition is declining rapidly in the heat, reported at 41% good-to-excellent this week versus 48% last week. ID HRS is rated 60% GEx vs 74% last week. Overall HRS is at 77% GEx this week, unch against last week. Canadian spring wheat is in very good condition, running in the mid-70% range in Alberta, last seen at 90% GEx in Saskatchewan, although those numbers are expected to shrink also.  

     U.S. Hard Red Spring (HRS) wheat crop condition shows 67% good-to-excellent, unch from last week.

     Based on USDA inspections for loading, U.S. wheat exports marketing year to date stand at 2.591 million metric tonnes (95.2 million bushels). +20.22% more than by the same week last year. With Chicago new crop prices generally $2.40 below last year at this point, there is no surprise that exports are a little better, although not enough better (yet) to trigger a price increase. The market is not sensing a need to price-ration supplies of wheat.  

     The futures charts are not yielding much, trading just above long-term lows. The process of building a pattern base that will allow healthy retracements back to the upside is still lagging. The useful points to observe are any challenge of those lows, using that point as a back-stop and a tripwire alarm. There is no buy signal evident in Chicago, while Minneapolis Hard Red Spring (HRS) continues to lead on global concerns about sourcing quality protein going forward, due to damage to Russian and European wheat crops.

     The trend is still defined as negative. 

This stuff is trackable. Let’s track it!   

Market Bullets® Monday July 22, 2024 : Pre-Dawn

     Very early trade Monday morning showed buoyant wheat prices, choppy for a few hours and then some new daily highs at about 2:00 AM PDT. There are no significant fundamental headlines, and no high-powered chart patterns to frighten short-sold funds or attract new buying money, leaving the short-term market activity vibrating in a narrow range with a very slight upward tilt.

     The effect of the now-37-session price slide in Chicago wheat futures has been to slow producer sales and stimulate export sales. The global wheat market is technically sniffing out long-term lows, a process takes time and is always fraught with risky impulses to buy, or to hold wheat in the bin too long. Harvest has enough distractions to make producers unwilling to make the calls anyway.

     The world knows that U.S. winter wheat harvest is advancing very swiftly, and the spring wheat crop may end up being larger than anticipated, which helps keep the lid on prices.  

     US wheat export sales at 35% of the USDA projection at 7.76 million metric tonnes, 1% better than the 5-year average pace, quite a change from last year’s constantly lagging figures. Loading inspections to date total 2.2 million metric tonnes, 1% below the 5-year average. No market-shocking items here, but much improved over last year. The current front-month price in Chicago Soft Red Winter (SRW) wheat is more than $1 per bushel lower than the same week in 2023. Seems like there is a calibration due.

     Prices can still go lower, as markets often exceed expectations, but the current pattern does give us a hint that it is probably time to put away the outsized short-sold positions that have been so common over the last year. The fund traders will respond readily if a confirmation of a low is produced. That net short-sold position is fuel for a short-term run-up that may be enough to identify long-term lows. It is still dangerous to over-anticipate lows, but a plan should include what to do if the pattern changes.

     The wheat price trend is showing base-building tendency. Watch for testing the recent lows at least once before another sustainable leg up. Use last week’s lows as a tripwire for another incremental sale if the plan allows it.  

     The wheat market is watching corn for a clue, as it is known that there are still quite a few bushels in storage that may have to move before corn harvest this fall. If corn prices get a weather rally, those bushels will likely keep a governor on the price throttle unless it gets really serious.

     100+ degrees and 10-15 MPH winds are not unfamiliar to most harvesters, but these are the conditions under which fire becomes a near threat, so we keep the water cannons loaded and sniff the air for hot bearings or hydraulic pumps. Keep the disk close and ready and stay safe.

Stay tuned for more…

Market Bullets® Friday July 19, 2024 : Close

     French wheat crop condition dropped 5% down to 52% good to excellent per AgriMer. Paris Milling Wheat futures jumped €8.75 per metric tonne (about $.26 per bushel), back to  its 2-weeks-ago level of prices before the gap lower on Monday morning. That gap has been vigorously filled.

     The Chicago September futures chart has a veritable ladder to climb, with each technical target on any rally followed immediately with another moderate challenge target. The recent lows are now a kind of backstop for decisions. If those lows are challenged in any meaningful way, it will be obvious, allowing appropriate responses (Selling an incremental slice?).

     The wheat price trend put in a mixed week. KC and Minneapolis hard red wheats both managed a positive net. Chicago ended Friday’s episode with a close well below its early highs. Paris milling wheat was the leader in early U.S. trade. The trend consolidation is likely to take some time, with volatile, whippy action and anxiety about possible political violence and massive internet interruptions that grounded more flights, more quickly than 9-11. Its been a strange week, and we should all be glad that Trump was not killed, as the upheaval from that event would have been unspeakable. Markets do not respond well to drama, so we count our blessings now, pause and pray a little for the families that had losses at Trump’s rally, and try to set up for the next week.

     Stay tuned. At least it is not boring. -More commentary Sunday PM/Monday AM.  

Market Bullets® Friday July 19, 2024 : Pre-Dawn

     All of the week-to-date closing settlements for Chicago wheat futures have been within a few cents of $5.34. A new long-term low dating back to August of 2020 has been printed at $5.25¼. An uptick in global import activity suggests that end-users are sensing a seasonal low is near.

     KC Hard Red Winter (HRW) has also traded at a $5.45¾ low dating back to December of 2020. Minneapolis Hard Red Spring (HRS) is reacting to solid crop quality assessments with its own long-term low at $5.75¼.

     The market sees these new lows, but is not reacting with fear and loathing. Northern hemisphere harvest is top of mind, so there is not much shock and awe. Most of the fundamental data has been well-absorbed and accounted for. A few more nominal lows may even appear, but there is a slowly growing sense of anticipation of a seasonal low ahead.

     This does not mean a new rally is about to launch, only that the steep decline of the last 8 weeks is expected to de-accelerate and begin to build a base. The intensity and duration of the price drop this year will eventually produce some in-proportion reactions…not a tradeable idea yet.           

     Weekly wheat export sales showed a total of 578,502 MT for the week of July 11, the high end of the 225,000 - 600,000 tonne pre-report range of estimates and over twice the previous week.

     International Grains Council (IGC) projections as of July 18, 2024 show world wheat ‘24/’25 production up 1% from last month’s estimate at 801 million metric tonnes, with global ending stocks expected to be up 3% to 269 million tonnes.

     The wheat price trend is still classified as downward. Stay on plan. We will see the change when it comes.

This stuff is trackable. Let’s track it!   

Market Bullets® Thursday July 18, 2024 : Pre-Dawn

     Yes, the end-users have become interested in buying wheat. Those Egyptians manning their buying desk are experienced, practical and intelligent. They are telling us something, which is that wheat is cheap and this is the season to gather in the sheaves. The seasonal low is sometimes an elusive target, but this one is getting near. One thing that markets often do is move in proportion, in this case in proportion to the massive and swift downward move to current lows. The problem is only that there is no recipe for identifying a low in advance. We only really know a low when the turn has come. That is not a big problem unless we try to guess the bottom in advance. It will come when it comes. Meanwhile, we watch and listen to the market tone and intensity. It is not necessary to catch the last bloody penny, only to be on board the price train at some point before it leaves the switching yard.  

     Nearly the entire amount purchased by Egypt from Russia this week was below Russia’s self-imposed lower price limit by $39 per metric tonne or so ($1.15 per bushel).

     Algeria bought at least 600,000 MT of wheat in their tender on Wednesday. South Korean importers purchased 40,000 MT of US wheat on Wednesday. The crowd is moving.

     Does this mean the low is in? Mebbe! Mebbe-not. We will see it in the charts first, then the fundamentals will become the supports confirming the environment. It pays to be paying attention in this period.

     Every day passing for northern hemisphere wheat production is another day with less crop risk. With less and less green wheat still exposed to weather shrinkage, the market is turning toward other factors for price allocation. There is a brief lull until the southern hemisphere harvest begins, during which the demand for wheat is the most important factor. This is less intuitive than crop condition as a market guide. It includes many factors that are not direct in nature, like interest rates (storage costs), political stress (elections and potentials like tariffs and other market manipulations), freight costs, economic strength of various buyers and the motivations of wheat producers and originator companies, to name a few. This implies more difficult trend-reading, putting pressure on observation and marketing plans.

     Humans are often not very good at trading, as they have a strong natural tendency to hold onto positions during declining price periods, and conversely then being too quick to sell off during rising price moves. Experience says that the way to overcome this naturally problematic tendency is to have a good, detailed marketing plan that includes incremental sales based on some defined criteria. It’s not a big challenge to design such a plan, but the challenge comes at actually staying on the plan against strong emotional currents. Selling even a small amount of a crop at an obvious low can chap one’s hide, but the fact that the real low could be quite a bit lower in hindsight is the killer. $5.40 per bushel looks bad against last month’s $6.40, but it can also look quite a bit better from $4.70 (the next lower technical price target). That is why incremental sales are so important. There is always that next slice to be sold at a potentially higher price. Uptrend = “be patient”, downtrend =  “be quick”.

     The low is due, the trend is downward. Be quick to hit the planned sale, then wait for the low to show.

Stay tuned. Good hunting!

Market Bullets® Wednesday July 17, 2024 : Pre-Dawn Update

     There is still value in hard-copy charts. Try this: print a full-sized wheat futures chart. Lay it on the desk or a table, then back off a few steps and squint at it. Disregard whatever you know about the market for a moment. What is your impression of the movement of prices from a little distance? Even if you are comfortable with peering at a colorful and information-laden picture on a screen, or on that little time-stealer in your pocket, the impression of movement and direction is qualitatively different when its sitting on a table in pure, two-dimensional form. Sometimes a little fresh perspective can wash out crusted-up thought patterns and open mental avenues. Those old guys sometimes did get it right.

     Chicago is in a price-pause right at the tipping-point, standing on the plank, hanging ten. The market knows this very clearly. Importers have expanded their buying (Egypt pulled down a nice 770,000 metric tonne purchase at one shot this week, mostly from Russia with one cargo from Bulgaria). Even U.S. export sales have twitched upward, with the crop-year-to-date sales (starting June 1) reports totaling 7.1 million metric tonnes, up 42% from last year’s pace in the same period. This is no shock, as lower prices always stimulate more interest from end-users. Still, it’s nice to see the market accomplishing its objective of finding homes for all wheat.

     The wheat trend is not upward (yet). It is probably way too early to capture a low, and there is still quite a bit of downside momentum/risk for gambling with long options to replace any cash sales. If that strategy is of interest, it is best not to tie the purchase of calls of establishing futures long positions directly to the timing of cash sales. The criteria for the two are rarely in harmony. Separate the two and judge them for what they are on their own merits. Your results will be cleaner.

Market Bullets® Tuesday July 16, 2024 : Pre-Dawn Update

     Capitulation: “the act of surrendering or yielding: the terms of surrender.” How many wheat sales are being made under this heading? There are bills to pay; fuel, wages, parts, food…these expenses do not take the summer off. The marketing plan notwithstanding, the driver of “holding wheat in the bin for higher prices later” is a very poor decision-making basis. At this point, there are actually reasons to expect a bump, but harvest is not easily going to make such a gain significant or lasting. The ancient problem of holding wheat in storage as a speculative action is that there surely will be a rally, its just that it might start from a lower price than current trade…a lot lower! It may be many months, even years before we see another period of high prices like the one that just expired. We will know when it starts, but never how far it will go. That is the reason for being a trend-watcher. Stay on the trend. Let it pay you. There is no reason to suffer if you have been patient with uptrends and accelerate in downtrends.

     The trend in wheat is lower. Anticipating a price bottom is tempting, but it doesn’t pay well. Most of the time there is less than 1/3 chance of being correct about identifying the lows, and even that figure is over an historical period and requires great diligence. It will take time to rebuild buyer confidence in wheat futures prices, which will show up as consolidation patterns.  

     The price of storage, interest costs, and inflation of expenses all work against your chances of success in storage speculation. The capital gets restless and feels abused when it is held idle.

     National winter wheat harvest is 71% done. Spring wheat cutting will soon be rolling.

     Export inspections are improving as consumption takes a ride on the cheaper prices.

     Russian wheat production numbers are beginning to climb back up as they discover that the freeze/drought didn’t hurt those grass plants as much as they had feared.

     Ukraine’s harvest is also revealing better numbers than had been anticipated.

This stuff is trackable. Let’s track it!

Market Bullets® Monday July 15, 2024 : Pre-Dawn Update and Review of Week ended July 12.

      For the week, Chicago September futures dropped 39¾ cents, to a low last seen in the first week of April ’24. Trade in the wee hours of Monday July 15 followed through with prejudice on a minus 12-cents. The failure of the Chicago wheat chart technical defense lines to hold against the weight of harvest has release some pent-up selling pressure. Some of that is producer selling. With harvest bills to pay and probably some delayed marketing of old crop wheat from the “hopeful” bin to make room for the new stuff, the market has no reason to deny lower prices.

     Minneapolis Hard Red Spring (HRS) is making new long-term lows, as crop conditions have been strong, even as the KC Hard Red Winter (HRW) market has been able to hold above its old lows. The old price walls are tumbling down.

     PNW white wheat has found no reason to ignore the sink-hole in the red wheat markets, with a decline of 20 cents on the week ended July 12. Harvest for Soft White Wheat  is going to move rapidly north as the high temperatures have turned even the north slopes and gullies and halted any more filling of the sucker heads. Its time to roll the machines!

     Highly anticipated Russian crop losses on a freeze and then a drought that had been the driver of global markets have evaporated. Not that that government would ever exaggerate such a thing to prop up market prices…

      The USDA’s July World Ag Supply/Demand Estimates were not a net surprise for most of the trade, but they merely confirmed that there were not reasons to hold back on sales. Their “outlook for 2024/25 U.S. wheat this month is for larger supplies, domestic use, exports, and ending stocks. Supplies are raised on increased wheat production and beginning stocks. All wheat production is raised 134 million bushels to 2,008 million, on an increase in harvested area and higher yields. The first 2024 survey-based production forecasts for other spring wheat and Durum indicated an increase from last year for both classes at 578 million and 89 million bushels, respectively. Winter wheat production is also forecast higher at 1,341 million bushels on an increase in harvested area and yields.

      USDA’s projected 2024/25 season-average farm price is reduced $0.80 per bushel to $5.70 on higher stocks, recent declines in futures and cash prices, and lower projected U.S. corn prices.”

     In the same report, “the global wheat outlook for 2024/25 is for larger supplies, consumption, trade, and stocks. Supplies are increased 6.9 million tons to 1,057.2 million, primarily on larger beginning stocks for several countries and higher production, mainly for the United States, Pakistan, and Canada. Pakistan’s production forecast is raised 1.4 million tons to a record 31.4 million, based on government estimates indicating a large yield. Canada’s production is increased 1.0 million tons to 35.0 million on improved moisture conditions in the Prairie Provinces.

     Projected 2024/25 global ending stocks are raised 5.0 million tons to 257.2 million, mostly on increases for the United States, China, Argentina, Pakistan, and Canada more than offsetting reductions for Russia, the EU, and Iran.”

      It is difficult to find any notes in the USDA report that inspire buying wheat for profit, so the big spec trading funds discerned a mandate to add to short-sold positions.

     The trend for wheat is down. Don’t fight it. Keep in mind that holding onto un-covered wheat positions is expensive and it may be some time yet before there is any compensation.

     In the background of all of this bounty of guvmint information,  we have global election angst at high levels and a sort of horrified fascination with American political activity. People have to eat, and prices have been making buying wheat easier, so consumption figures are likely to expand along wheat harvest results. The job of the market is to re-home/ distribute wheat using price to maximize availability. Encouraging end-users to buy more wheat is just what is happening, which in the long run is what keeps the market healthy and able to continue to pay the most low cost/efficient producers to continue output. We will find a low. It is out there. Meanwhile incremental sales should not be delayed and maybe even accelerated. Ask your merchant about the option tools that may allow a bit more price in exchange for time.

Interest rates as expressed in the 2-year Treasury Notes have been coming down to levels last seen in mid-March. The Fed may find a way to lower their controlled rates soon.

     Diesel has reached its 38.2% downward retracement from its FW June to FW July up-move. It’s shaping toward a pattern-based potential for another 30-cent leg lower to about $2.40 to $2.30 New York Harbor. It’s worth following if you have to fill the tanks soon.

     Gold futures are approaching a challenge to its all-time high, now trading at $2,413 per Troy ounce, looking at the May peak at $2,414. This a decent gauge of global anxiety, suggesting more volatile and treacherous markets ahead.

This stuff in trackable. Let’s track it! Please text or email questions for clarifications.      

 More to come…Please stay tuned

Market Bullets® Tuesday July 9, 2024 : Pre-Dawn

     Brazil’s corn harvest is moving quickly, passing the 63% mark this week. Corn production in the northern hemisphere is shaping toward a heavy crop.

     Big Speculative entities have been slowly adding to net short-sold positions in wheat futures.

     Fertilizer prices have been fading over the last few weeks, with natural gas prices moving lower in a wide range of lower highs and lower lows for the last 18 months. Nat gas comprises about 60% to 70% of the cost of production of anhydrous ammonia.

     Wheat is working out the base for the next move, trading about 25 cents above the consistent lows since March, and in a band of prices that have regularly revealed buying interest since September of 2023. This low range is the tripwire alarm for lower prices if it fails to contain the sellers. If the base is sustained, the ratio target on the upside is about $6.24, about 50 cents to the north of current trade in Chicago futures.

     Our “Box-o-rox” 60-day moving average says, “proceed without delay to complete planned incremental sales”. With harvest moving faster than the averages, there is bound to be some wheat for sale along the way, so the expectations for any serious upward potential is still some weeks away.

     USDA’s monthly World Ag Supply/Demand Estimates (WASDE) will be released on Friday, July 12 at 9:00 AM Pacific, 11:00 AM Central.  

     The price trend for wheat is sideways at the low end of recent range. Rallies are likely to be brief and limited, but worth identifying for incremental sales.

     Stay tuned here for more later.

MarketBullets® Monday July 8, 2024 : Close

     Diesel is backing off of recent highs, trading at $2.5732 per gallon in New York Harbor, the same price level as July 1.

     US Dollar Index is slightly lower – still just above its 20-month mean.

     The developing technical challenge of recent $5.60+- lows in Chicago wheat futures will result in a readable short-term chart inflection point. Either the market will break downward through a price zone that previously held buying interest enough to support the price, or it will bounce off of that zone and create a 1-2-3 price reversal signal if it breaks above the $5.91 level. This is only a brief wiggle in what is shaping up to be a long period of such abbreviated price moves through the balance of harvest.

     The price headwind is obviously the last half of the northern hemisphere wheat harvest. Coupled with a large corn crop, the going is likely to require some work to identify decent sales points. This is where your merchant can help with strategies that can boost marketing performance.

     PNW Soft White Winter (SRW) is steady at $6.00 Portland thru September delivery, with harvest as of July 7 in the small single digits completed in WA-OR-ID. USDA reports overall U.S. winter wheat harvest at 63% complete versus its 52% 5-year average. The 6-state spring wheat crop condition is 75% Good-to-Excellent condition versus 72% last week.

MarketBullets® Monday July 8, 2024 : Pre-Dawn

     Pre-Dawn Trade on Monday in Chicago Soft Red Winter (SRW) wheat were running negative. September futures were trading down 9 cents at about 2:00 AM. KC Hard Red Winter (HRW) futures were down 12 cents, while Minneapolis Hard Red Spring (HRS) was trading down about 7 cents.

     Last week’s USDA Harvest Progress report showed that the combines are either being moved into the shed in Oklahoma or moving on northward. The five year average for the same week is about 84%. Kansas is at 80% complete versus 49% average.

     Winter wheat condition was reported last week at 52% Good-to-Excellent versus 40 last year.

     Spring wheat is seen as 71% overall Good-to-Excellent 48% last year.

     All of the above harvest and condition reports will see a new weekly release today, Monday July 8.

    U.S. wheat export sales last week were better than anything we have seen since the Chinese-driven Christmas rally last year, which was ultimately cancelled. At this very early point in the crop year, export sales are 32% ahead of last year, same week. Driving factors for this phenomenon include a dramatic price decline of over $1.60 that started on the same week as the new crop-year started. Russia is still dominating global wheat prices, and if successful at capturing control of Ukraine, will continue to push OPEC-style pricing power for decades to come.

      France is expecting a smaller wheat crop this year than any in the last 8 years. Currently expected French production is about the same as Kansas and North Dakota combined.

     Sniffing around for price-positive, buyer-inspiring factors,  corn is still looking at a record net short-sold fund position. Eventually this becomes fuel for a short-covering rally. This is an indirect factor and can be frustrating to apply to wheat price analysis, but it is a supportive expectation in the absence of other, more direct wheat price drivers. It will take some dramatic event to trigger the funds into rushing for the buy-back exits.

     One of the potential events that occasionally light the fuse on short-covering rallies is the WASDE and Crop Production reports. The next data release is Friday, July 12 at 9:00 AM Pacific Time, 11:00 Central.

      The trendline is still weak, even with the now-three-week-old rally in wheat futures. Successful wheat marketing this year will require quite a bit more attention than it did last year. Harvest is over halfway completed in U.S. winter wheat country. The market presently sees no heavy reason to ration wheat supplies via price allocation at present. The wheat pipeline valve opens and closes on about 50 cents either way at present.

Stay tuned. There will be opportunities.

MarketBullets® Wednesday July 3, 2024 : Pre-Dawn

     Wednesday’s trading session will end at 11:20 AM Pacific/1:20 Central (Normal Close). Trade will re-start on Friday morning at 6:30 AM PDT/8:30 AM CDT.

     This week’s crop condition report showed the 18-state winter wheat rating at 51% good-to-excellent, off 1% for the week but 11% above last year’s condition for this calendar week. Spring wheat showed 72% good-to-excellent versus last year-same week 48%.

     Washington’s winter wheat crop rates 48% g-ex, versus 51% last  year, Oregon is at 67% g-ex, far above last year’s 21%, and Idaho winter wheat rates 81% g-ex this year versus 48% last year.

     The trend for wheat in the major futures markets still counts as negative, but the last 6 sessions including Wednesday pre-dawn trade shows about 27 cents up from the lowest close on June 25th in Chicago. KC has gained 13 cents from that low, while Minnepolis Hard Red Spring futures are 33 cents above its low in the last week of June.

Tune in again on Friday for the weekly summary and full update.

MarketBullets® Friday June 28, 2024 : Weekly Closing Update

     The quarterly US Grain Stocks inventory report showed new NASS estimates higher than average pre-report surveyed guesses for wheat, corn and soybeans. US corn and wheat planted areas were down from last year, but beans were up from last year.

     The Chicago wheat futures market immediately dropped 12 cents, a tad more than half of Thursday’s gains, trading briefly at $5.66. At the close, Chicago was 9 cents above that low, down just 4 cents on the day.

     KC Hard Red Winter (HRW) printed a low just one cent above its previous weekly low, which itself was the lowest since April 19th. At the close HRW was a dime above its Report Day low, netting a dime loss on the day.

     Minneapolis Hard Red Spring (HRS) managed to hold to just 4 cents down at the close.

     On the week, wheat markets were steady. PNW white wheat bids were quietly off a nickel, while Chicago and KC both settled within a cent of their week-ago Friday close. Minneapolis gave up about 4 cents on the week.

     The report will likely have some lingering negative effect on wheat prices, since it was not supportive, but the focus of the trade will shift back to harvest and demand.

     The short-term negative price trend in wheat is paused. The support zone under our bellwether Chicago futures has been established for 3 sessions between $5.58 and $5.60, about 15-17 cents below Friday’s close. The longer this price zone holds, the more significant it becomes.  

More details and weekly summary pending.

MarketBullets® Friday June 28, 2024 : Pre-Dawn

     Some short-covering ahead of the Stocks and Plantings reports on Friday AM gave Thursday some buyers at last! The profit-taking may have been spooked by a nice positive export sales report put Chicago on a gain of 19. KC and Minneapolis were both plus 15. PNW white wheat bids acknowledged the general buying with a whole nickel. If the price in Chicago can hold onto its gains after the report on Friday 9:00 AM, 11:00 Central, then Portland might come up with a few more cents.

     The trade is looking for U.S. planted wheat acres to be up slightly from the previous report in March. June 1 inventory in pre-report guesses are averaging about 684 million bushels in a Reuters survey. The June Stocks and Intention reports have a history of surprising the trade, but any quarterly reports have that potential.

     The International Grains Council (IGC) released a fresh report with a 1 million metric tonne increase to world carryout at 261 million tonnes, about 4 tenths of a percent change. Call it “Steady”.

     The up-day was the strongest single session since May 20th, and helped set a baseline from which to measure decisions going forward. The little, 3-day series since Tuesday put in similar lows at about  $5.60, suitable as a way to measure failure if the market cannot hold after the report. This one is tradeable for the spec guys, so they will likely be in a crowd just below those lows, ready to pounce.

     The report will show on the charts by 9:05 Pacific, for better or for worse. Friday’s closing update will take a look.

Stay tuned. Good hunting!

MarketBullets® Tuesday June 25, 2024 : Pre-Dawn

     Some high-momentum negative wheat price charts, especially the Minneapolis Hard Red Spring (HRS). The crop reports are not scaring the funds as they continue to steadily add to short-sold positions. The US Dollar Index is steady, as is the Ruble/Yuan relationship (The announcement of the big shift to Chinese currency reserves for Russia is maybe not the event that Putin had hoped, although the sanction setup did not leave him much choice. Russian wheat and oil is still moving into the market smoothly.

     The relevant list of factor news is slim, leaving the smaller speculators (that’s us holding onto un-covered wheat in the bin or in the field) without a clear mandate, unless you count the fact that the trend is downward until it changes measureably, thus promoting current incremental sales of remaining old-crop or still un-covered new-crop. The pressure is on those who are long in any capacity. This is when staying on the side of the trend counts. It does take some of the pressure off to sell a slice or two. There is no reason to expect a price bounce more than 50% of that last free-fall, say maybe back to that $6.00 level, about 50 cents from current. The downside is certainly still open, with sensitive tech levels from about $5.25 down to $4.85. The question then is what if it gets there? What will be the proper response? The good answer is to not go there without any coverage at all. If your plan says keep selling a downtrend on regular scheduled amounts, keep on the plan, man!

     There will be a bounce…but from what level? This is a very old problem that returns to haunt us when we have not done what we aughta. There are strategies. Call your best merchant and talk it over with them. They don’t know the future but they answer the question every day.

     The world exporter stocks-to-use ratio is at a record low.  Seasonal harvest lows are due, potentially triggering a short-covering rally before the key USDA Stocks/Seeding Reports next Friday. Wanna take a ride? It might not be much fun.

‘Tis trackable… Let us track it!      

MarketBullets® Monday June 24, 2024 : Early AM

Nothing interesting to see in this morning’s trade, folks. Going fishing!

MarketBullets® Friday June 21, 2024 : Close

     Minneapolis Hard Red Spring (HRS) futures closed at a new low dating back to the first week of April 2021, the first week of accelerated upward trend that culminated in the extreme highs generated by the Russian invasion of Ukraine in Feb of 2022.

     KC Hard Red Winter (HRW) reached a new low dating back to April 2024, a stronger pattern than HRS and very similar to Chicago Soft Red Winter (SRW) futures.

     Crude oil at $80.59 is within a dollar per barrel of the flat center of the price range it has occupied since August of 2022. The range is about $30 deep from high to low, with highs around $95/bbl and lows at $63.50. There is a very moderate upward bias at present. No chaos here.

     US weekly wheat export sales came out at 589,000 tonnes, better than expected.

     Friday’s stock market trade was quiet ahead of “triple witching hour”, a derivative expiration day for some $5.5 trillion worth of options based on index’s, stocks, and ETF’s, which expired Friday  per “SpotGamma”.

     Nebraska-South Dakota are expecting rain and-t-storms which may extend into Minnesota -Wisconsin.  Some areas of Northern Nebraska saw 1-3″ Thursday, some heavier. The remainder of the US will be mostly dry into the middle of next week. Most of the PNW wheat country is expecting low 90’s to mid-80’s and clear for the next week until Thursday and a chance of rain. Conditions are good.

     The market influencing news is fragmented. There are inputs from all around, but nothing to catch the wheat market’s imagination. The trend is downward until further notice, that is a pause and correction is overdue. That kind of price increase is not a buy signal, as contra-trend momentum trades are notorious for being viciously volatile. First the momentum of the downward slide of the month-to-date will have to be blunted, followed by a consolidation. The odds of a quick return to the recent highs in late May are not strong. The market has buried the “Russian freeze-drought rally” almost entirely. That is because a large part of that runup came from spec fund short-covering. Once that coverage had been achieved, we have had to move on to…plenty of wheat.

     Every day while searching for fundamental support for higher prices we will be looking for that corrective rally, which could appear quickly. The trade will be anticipating the next USDA data-dump on Friday morning with a quarterly Grain Stocks inventory report at 9:00 AM Pacific / 11:00 Central. Most large speculative traders have an aversion to establishing large positions in the week before a major USDA report, so the upcoming week is likely to be volatile and choppy. The trend is negative for now. Stay on planned incremental sales. Call your merchant about HTA’s.

Stay tuned, there’s more to come.

MarketBullets® Friday June 21, 2024 : Pre-Dawn

     MarketBullets will be rolling most grain charts from July contracts to September on Monday, June 24. End-of-quarter is watershed date for funds. It’s when many calculate their quarterly paychecks based on profits (if any). Positions are already being rolled (buying back July and selling September or December at the same time). The spreads are showing it as the July futures were down less than the deferred contracts on Thursday.    

     On Thursday, Chicago July closed 7 cents above its lowest trade on the day, but still down 9 cents.

     Hard Red Winter wheat yields have so far been slightly above expectations in Texas and Oklahoma. Kansas has completed 28% of its harvest and is also hitting yields that are average or slightly above previous estimates.

     Private Russian analysts have begun to walk back some of the recent crop estimate cuts, posting new estimates that are slightly better.

     KC Hard Red Winter (HRW) is back to its mid-Feb / Late-Apr range. Major lows between $5.51 and $5.61. If they are overcome by downward movement, there are few old-school technical objects until the low of August 2020 at about $4.10 ($1.88 below current).

     The Buenos Aires Grains Exchange (BAGE) bumped its wheat planting estimates for Argentina by 100,000 hectares (247,000 acres), to 6.3 million hectares (15.57 million acres), a 1.6% increase. Argentina continues to show signs of more aggressive attitudes toward exportable wheat in the next year, as they pull back from a previously socialistic setup.

     Heading into Friday of a 4-session week with 38 cents of losses smells like a profit taking day, as the swing traders have become quick to clip coupons. The meaning of a rally on Friday is limited, with a lack of fundamental or technical motivators beyond momentum trades. Country movement has stalled, even with harvest rolling, although there is always some easy wheat entering the channels to pay bills. The market is having no trouble finding enough wheat to fill needs. This condition will be with us for a few weeks, so barring any disastrous shift in weather patterns (too much moisture, or a “high pressure dome” raising temperatures to extremes on the northern tier and Canada), the expectations of radical moves is muted for the present; an environment that calls for incremental sales at regular intervals unless there is at least a short-term upward wave, a pattern that involves careful and deliberate marketing.  

     There is a very good Spring Update Letter available from Northwest Grain Growers available <here>.

     Next USDA data release: Stocks-In-All-Positions inventory report due in one week, Friday June 28, 9:00 AM Pacific, 11:00 Central.

It’s trackable. Let’s track it!

MarketBullets® Thursday June 20, 2024 : Pre-Dawn

     In the wee hours of Thursday June 20, the Chicago July futures contract was down 5-7 cents, thumping hard on its 78.6% retracement line. That is down $1.24 from May 28, the highest close of the 57-session runup from the Ides of March (which were also a low point for Julius Caesar). The 78.6% line is a kind of last-ditch turning point, beyond which is a yawning pit allowing a return to the $4.24 level according to the ratio approach, not seen since May of 2019. That target is very unlikely, but a failure here of the $5.76-$5.70 zone suddenly points Chicago wheat toward a challenge of the $5.23-$5.60 levels that revealed buyer interest back in March and April’24.

     But this down-move is getting mature, having lasted 16 trading sessions with only 2 that showed any positive tone. The market structure is getting tilted again and will need a corrective bounce soon. The strength of the rally that ended at the end of May was fueled largely by short-covering due to the threat of Russian freeze-drought crop losses. Part of the fear that drove the funds to cover came from some dubious statistical sources, and part from plain old FOMO among the funds, whose profits on large short-sold positions had been looking very favorable for bonus paychecks at the end of the quarter. Once that big short had been mostly covered, then it became a new hunt, and the funds have begun re-establishing those same short-sold positions, with harvested wheat hitting the market and declining risk from weather on maturing wheat. Now it gets more challenging for the marketer.

     The short-term trend downward according to the Box-o-Rox indicator is negative, with the July now 45 cents below that 60-day moving average (see Chicago Daily Chart) above. There is a strong temptation to hold on for the inevitable bounce, but the problem with that strategy is that doesn’t always work but it always leaves the door wide open for a much larger loss. It’s OK to miss a planned selling point in an uptrend, but in a powerful, nose-down dive, it can become a real problem to pull up before hitting the ground. The next couple of trading days will tell. If the 78.6% zone holds, then that becomes a trigger and a technical backstop. If it fails, then it’s at least incremental sale time.

     The charts, along with most of the trade, are about to roll to September futures as the July is approaching delivery. There are about 17 cents in between the two Chicago contracts, as the higher-priced September is reflecting the market’s incentive to hold wheat until later delivery periods with a better deferred price. There is another big, 25-cent carry between September and December. The market is telling us it does not want physical wheat now, and is willing to pay storage and interest costs to hold it back. Ask your merchant about HTA’s and other tools. The carry in KC Hard Red Winter (HRW), Minneapolis Hard Red Spring (HRS) and even Paris milling wheat are smaller, but the principle holds.

Stay tuned, at least it isn’t boring…

MarketBullets® Tuesday June 18, 2024 : Close – Pre-Juneteenth Market Holiday

     Monday and Tuesday saw brutal price declines, including volume confirmation. The total price drop for the two days was about 30 cents in Chicago Soft Red Winter (SRW), KC Hard Red Winter (HRW) -18, Minneapolis Hard Red Spring (HRS) -26 and Paris Milling Wheat 11.5% -€7.75 per metric tonne (-$.22 per bushel equiv).   

     USDA’s National Ag Statistics Service (NASS) Crop Progress report showed Kansas harvest pace at 28% complete, 20% ahead of normal.

     Most of Western Canada has rain in their forecast, heaviest to the east. Conditions are good.

     July grain options expire on Friday June 21st. If you are short puts in-the-money, even if just a little, exercise is a sure thing. You will inherit a long-bought July futures contract at the strike price (including the loss). You won’t have much time to decide what to do with it. If you short the July futures before the fact, it will effectively close the position and wash out on expiration day, just remember that if the market rallies you will not gain from it, and if it rallies above the original put strike price, the futures will begin to cost you. There is occasionally a small (micro) chance that a short, slighly-in-the-money option will not auto-exercise, but that is a rare bird, indeed. The moral is that it is usually better to simply close the position, or roll out to a later month, or cover with futures earlier. Take the “L” and move on.

     It may not be intuitively easy, but the close of wheat trade on Tuesday was right on top of a 3-point trendline on the weekly Chicago futures chart, not a big signal, but ONE of these points is going to be a tipping point. Thursday/Friday markets will honor or deny. At least this is something to watch Thursday morning.

Stay tuned.

MarketBullets® Monday June 16, 2024 : Pre-Dawn

     Crop condition in PNW shows WA winter wheat 47% good-to-excellent, down 1% versus 48% last week. Oregon 57% this week down 6% from 63% last week. Idaho 75% versus 73% last week.

PNW spring wheat has WA at 52% good-to-excellent this week versus 57% LW. ID is Unchanged at 77% this week versus 77% LW.

     National winter wheat condition 49% G-EX versus 47% last week and 38% last year.

     Small changes in crop condition to not add up to enough to move traders.

     The market is weak, headed for the last technical points that suggest support. Chicago has now erased $1.09 off of the July contract in the last 14 trading sessions ending at Monday’s close, which reaches back to April 23 to find previous trading at this level. There is a reasonable ratio plus ordinary support patterns around the $5.76 price level (about 12 cents from pre-dawn trade on Tuesday morning.    

     Chicago July has returned to the 227-session mean line descending from the July 25, 2023 high point, about 30 cents below the 60-day moving average.

     The fundamentals are fragmented and poorly defined, as harvest rolls faster and the northern tier gets enough moisture to confuse the picture.

     The trend is downward. The impulse is to wait for higher prices, but that may take some time to appear. No buy signal here. If an incremental sale is called for in the plan, take it.

Stay tuned.

MarketBullets® Sunday PM, June 16, 2024 : Into the Early Monday Session

     Sunday PM the Chicago wheat market opened on a gap down, and was trading down 9 cents at 6:45 PM. That is lower than the previous low of June 10-11 by 2 cents. If the July contract closes at that level or lower, it will likely stimulate some additional selling.

KC Hard Red Winter (HRW) wheat futures were down about 6 cents, Minneapolis Hard Red Spring (HRS) futures minus 3, and Paris milling wheat was trading down €1.75 per metric tonne (about $.05 per bushel).

     Most of the pressure is coming from a moderating Russian weather forecast, which has some moisture in it and may signal the end of the rapid crop shrinkage trend of the last month. This leaves the global wheat markets in a position lacking a buying mandate.

     The trend is negative , as key chart price zones that had previously represented buying interest are under attack for all three major wheat contracts plus Paris.

     The U.S. Dollar Index is steady, along with the newly ascendant (at least in the news-wires) Ruble/Yuan foreign exchange price. The shift by Russian central banking toward international trade settlements in Russia that exclude the open trading of U.S. dollars on the MOEX (Russian exchange organization) has not come a total shock to the world markets, especially as a new set of sanctions recently applied to Russia were banking-oriented, putting heavy pressure on any nation that trades with Russia to refrain. This issue bears watching, but is not (yet) a key fundamental for wheat.

Stay tuned. We will be back at Noon Monday.

MarketBullets® Friday, June 14, 2024 : Weekly Close                             

     Paris closed out the week below the previous low’s defense line at €238.00, a decline of  €7.00/MT (for the week, now at €236.75 per metric tonne. Paris has been a leading price discovery market in the Black Sea zone of influence, so the price pattern may be suggesting that the “Russian Crop-Damage Show” is about over, leaving the market without a prime, price-positive factor.

     Biggest trade volume day for the week in Chicago was the one big positive day with a 19-cent gain on Tuesday. The volume of trade declined each day after that, with trade ranges successively narrower, suggesting more trade affirmation for the up-day than the flat to negative days following. This may  be a simplistic view, but there are historical validations.

     There is moisture in the short-term forecast for a wide range of U.S. northern tier wheat states. The wheat is looking healthy outside of our back door, and we are entering June with some moisture in the ground, so the potential for “blue wheat” is low.   

     From the Grain Industry Association of Western Australia (GIWA), “Several rainfall events over the last two weeks in Western Australia have ensured crops that were sown dry will germinate and crop that was up will now have at least a chance of returning reasonable grain yields. …we are now on track for at least an average year rather than a well below average year as was the case just a few days ago”

     The big specs are rebuilding their net short-sold positions. Chicago basic large spec positions now an aggregated -25,026 contracts, up from -5,415 in mid-May. This is not a massive position, but there is no gross signal that would be enough to slow the selling down much.

     A summary review at the end of this turbulent week adds up to a fundamentally mild negative. The next 2-3 weeks will be the peak of northern hemisphere market anticipation – if any - of crop shrinkage, followed by a long slide into winter wheat mid-to-late harvest and then spring wheat. The futures market is called that because it must be focused on future potential. That puts the beam on where the harvest results will be distributed; into storage or into the consumer channel. Costs of storage, demand, war, and where the money thinks all this will lead are the factors eligible. The charts will tell us the story.

     The big trend is still positive, but just by a hair or two. We are at an inflection point. It’s a good time to intensify study of the price movements.

This stuff is trackable. Let’s track it!  

MarketBullets® Friday, June 14, 2024 : Pre-Dawn                              

     The Russian central bank has officially adopted the Chinese Yuan as its “benchmark” currency, and will no longer be trading in U.S. Dollars on the MOEX, Russia’s largest trading exchange. The effect on Russian crude oil trade settlements is to force it into interbank channels, a less visible and more expensive venue. This will create a new focus on the foreign exchange markets. One small way this will affect business will be that many buyers of Russian wheat or other goods will now be forced to adapt to conversion of their local currencies to Yuan in order to pay their Russian bills, opening lots of small new doors for trade. Whether this is meaningful to the wheat market is doubtful at the moment, but this will take considerable time to play out in global markets.  

     The Russian Ruble is slowly declining versus the Chinese Yuan, making Chinese purchases of Russian products less expensive. See Ruble/Yuan chart <here>

     The high-low price range in Chicago July wheat contracts on Thursday was entirely contained within that of Wednesday, which was itself contained within the range of Tuesday. Volume of trade has declined each of those days. The market is calming itself (sucking it’s thumb?). The WASDE was not a big influencer of price. The weather is moderating in Russia, but there is still potential drought effect. Harvest is moving quickly in the U.S. as weather is perfect for threshing in HRW country.

     U.S. wheat export sales suck. It is too easy to buy wheat from too many origins to stimulate U.S. sales.

     Rosario Exchange estimates Argentina's wheat production will reach 21 million metric tonnes in 2024/25, a 44.8% increase from the previous year at 14.5 million. It is clear that the new conservative administration is likely to make exports of wheat a greater priority for the first time in a decade or more. There was a time when Argentina dominated wheat export prices like Russia has been lately.

     The big picture is beginning to be more complex. There are large factors on the move, but it is not obvious what will emerge from these tectonics. The trend in wheat is still in a negative slope, with a sloppy pause in progress. If the price fails to hold above recent lows around $6.05, it will be an indication of additional weakness that targets the next potential resting spot around $5.76, a price not seen since mid-April on the way up. On the upside, there is a $6.50 ratio line.

     It is inappropriate to manufacture reasons to expect higher prices at this juncture. Harvest makes wheat move, and every day passing makes the crop less vulnerable to shrinkage due to weather. If interest rates do not come down, the cost of storage will rise, as will cost of capital.    

     Stay tuned. Stay on plan. The coming weeks will require thoughtful and deliberate marketing efforts.

MarketBullets® Thursday, June 13, 2024 : Pre-Dawn

     The WASDE report was a non-event. USDA left the U.S. wheat carryout projection at 688 million bushels. The real number will come on June 28th with the Stocks-In-All-Positions quarterly inventory report. The new crop wheat production estimate was increased 17 million bushels to 1.875 billion, slightly below the average trade guess. The increase was entirely from a better-than-expected Hard Red Winter (HRW) yield assumption. Ending stocks for the new crop year were pegged at 758 million bushels, down 8 million. Old crop global ending stocks were increased 1.76 million tonnes, a less-than-1% cut, but new crop ending stocks were cut an even smaller percentage. So…neutral to positive? There are bigger factors.

     Paris milling wheat commitment of traders report for the week ending June 7 showed a small cut in net long-bought wheat contracts. Suggesting “investors” were more interested in taking profits than getting short.

     There is still some life in the Russian weather-loss horse. An official Russian Grain Union has been quoted that frost hit 15-30% of winter grain. But that was just the setup. It has been the following drought conditions that have damaged the wheat. It is still just talk. How that plays out in actual harvest results will show up in export taxes or quotas later. For now  , it is the only game in town that can still lift wheat prices during an accelerating northern hemisphere wheat harvest. When we see small, incremental adjustments to USDA figures, all well within the boundaries of error and variability, it means that we have no big price adjustments needed.

     If there is a rally in wheat, it will have to come from wider loss-talk from outside of Russia, or just plain technical machinations among the funds. In this environment, 50 cents is a small run, making it really tough for the small, underfunded speculator (endangered species?). The retracement line has held so far, but it is a precarious pattern. Box-o-Rox, 60-day moving average is at $6.18, versus the Thursday Pre-Dawn trade at about $6.23 in Chicago, a slim margin, but one that is back to “hold” for that indicator. The traditional problem of actually trying to apply a moving average as a trading system is that the price frequently will whip back and forth at a key level, giving buys and sells on alternate days. Box-o-Rox is an indicator that is intended as a trend ID that confirms other approaches and is best applied as “hold-or-sell” on already determined selling amounts.

     We need more than a hunch to declare a renewed upward trend, like maybe a 1-2-3 reversal or other pattern of trend-change. These things take some time to emerge. Meanwhile, the downside is probably being muted by a lack of country selling and some renewed enthusiasm among importers, a sleepy U.S. Dollar Index and a lower interest rate chart. There is no buy-signal at present.

Stay in tune, Russian crops are made in June.

MarketBullets® Wednesday, June 12, 2024 : Pre-Dawn/Pre-WASDE & Crop Production

     USDA reports will come out 9:00 AM / 11:00 AM Central Wednesday morning. The market is anticipating the U.S. wheat production numbers to swell slightly from last month’s estimates and the World ending stocks to shrink slightly.

     Very early Wednesday morning trade was low volume, with Chicago and Kansas City both slipping back down about 6-8 cents. Minneapolis spring contracts were off 5-6.

     Heads up on fertilizer prices looking forward. Natural gas represents about 60% to 70% of the cost of production of anhydrous ammonia. The Nat Gas chart is showing some signs of rising after quite a long period of negatives reaching in February to lows not seen since June of 2020. Now the slope is positive, and heat in natural gas country points to electric generation demand.

     Next comment will come after the USDA reports.

Stay tuned, stay cool, take care of bidness!

MarketBullets® Tuesday, June 11, 2024 : Close

     Tuesday Chicago wheat futures turned up 19 cents by the close, erasing Monday’s dismal decline with a closing price just ¼-cent above Monday’s opening trade. The intense daily selling of the last 10 sessions allowed short-term traders to sell aggressively and buy back on Tuesday for a quick profit ahead of USDA’s WASDE and Crop Production reports due Wednesday AM. KC Hard Red Winter (HRW) was up a dime, and Minneapolis Hard Red Spring (HRS) gained 4½ cents. Paris milling wheat contracts gained €7.50 per metric tonne (about $.22 per bushel equivalent). Part of the buying came from a buoyantly active export market, as even Jordan came in for a vessel after being absent since March.  

     The effect of the day’s action validated the retracement line of 61.8% of the previous upward move. The fact that the market was able to reach all the way back to this line in the sand suggests a lack of confidence, but this may become the technical chart backstop and the beginning of a rally attempt. Wednesday’s report and the trade guesses will set the tone if this is to happen. Certainty is in short supply.          

     Egypt’s General Authority of Supply Commodities (GASC) this week has completed the purchase of a total of 460,000 tonnes of wheat from Ukraine, France, Romania and Bulgaria for August shipment – again - for the second week - none from Russia.

     The average trade estimates being batted around ahead of Wednesday morning’s U.S. Crop Production Report for All Wheat are indicating 1.88 to 1884 billion bushels versus the previous USDA estimate at 1.858. New crop ending stocks guesses are about 778 million bushels, with old crop stocks probably unchanged. If the report shows the trade is close with their guesses, the market will move on quickly from the potential volatility that would otherwise erupt if the guesses are wrong.

     The hopes for a renewed uptrend (at least a bounce) are still alive, although it is unlikely to trigger any heavy country movement at current price levels. The big picture is still an upward slope, even with the rather severe test still underway. A failure to remain above Monday’s  Chicago July futures low at $6.06 would be a statement of weakness and require recalibration of chart patterns.

     PNW white wheat is reacting not just to Chicago’s troubles, but also to the improving crop condition numbers for soft white winter.  See previous update below for figures.

Tune in tomorrow for the new USDA results. Good hunting!

MarketBullets® Tuesday, June 11, 2024 : Pre-Dawn

     Winter wheat crop condition as of June 9 showed national Good-to-Excellent rating at 47%, minus 2% from the June 2 figure. For HRW, Texas dropped 6% to 30%, Kansas down 2% to 32%; for SRW, Illinois gained 4% to 77% and Indiana was unch at 79%. In the PNW, given timely rains, Washington is at 48% unch, Oregon jumped 9% to 63% and Idaho gained 5% to 73%.

     Harvest in Texas is about 47% completed. Kansas is test-cutting at 5% in the bin.

     Production in India is slowly increasing, Their government had been considering removal of their 40% import tax.

     The trade is trying to work out where the bounce we are bound to see will originate. The WASDE will preoccupy the market’s attention in the last half of Tuesday’s trade going into Wednesday’s data release at 9:00 AM Pacific/11:00 Central. The general attitude is to expect the now-familiar dichotomy  to continue with slightly rising U.S. and slightly falling global ending stocks. There is still some doubt about Russian wheat estimates.

     The chart patterns have reached some extremes, since after 10 one-sided sessions on the downside everyone is crowded on one side of the boat. The market will be seeking excuses to buy, so if there are surprises they will likely be negative ones, but that is just a WAG. Pre-report trading is always a crap shoot, so the impulse toward short-term profit-taking will be increasing on Tuesday.

     We are at a measuring point. How the price of wheat moves in the next couple of days will set the tone for a while, as the northern hemisphere harvest mutes the urgency among buyers.

Stay tuned to this channel.

MarketBullets® Monday, June 10, 2024 : Closing Brief

      This wheat market does not believe the world needs prices to pull wheat out of the hands of producers, and the last 10 days of trade have shifted cash sales back to “granny” gear. The Russians are still selling wheat. Harvest is speeding up in the Midwest. The U.S. Dollar is not “surging”, but it is relatively firm in its sideways chart pattern. Paris milling wheat contracts settled down about €4.25 ($.12 per bushel equiv). It is too easy to buy wheat. Until that is changed to a less abundant picture, the wheat market is vulnerable to money movement forces, as the funds once again press toward larger short positions.

     The Chicago market stopped for the day directly on one of the last lines of defense for buyers – the 61.8% Fibonacci retracement line, along with a few old supports. If the trade does not give at least a “tip o’ the hat” to this line, the apparent message is that all that talk about Russian frost damage and dry conditions was just that; talk. This can’t be much of a surprise, but it could be taken as a cautionary tale about what kind of manipulative data-flow we can expect from Russia if they get control of Ukraine’s wheat country (that’s a rant…they DID have the driest month of May in 30 years).

     Turkey is dithering a bit about their import ban. They may re-enter the wheat import market at any time, since they have made an effort to appease their wheat producers. This is not a big statistic, but presently is a kind of bellwether. Their timing will be instructive.

      The market is a live beast, wily and independent of what we think it must be. If it doesn’t do what we think (or wish) it ought to, that is because we are missing important data, or we are indulging in wishful thinking. This can be a very expensive bad habit.

     For now, the momentum is negative. Tomorrow we will begin to be preoccupied with the WASDE and Production Reports coming out Wednesday morning at 9:00 AM Pacific Time/11:00 Central. There is considerable pressure on this particular report. With that, along with Federal Reserve meetings and riled-up political circumstances in Paris and Israel, the anxiety levels in the world are up a tid. The name of that game is “Volatility”, which makes options more expensive (or rich, if you are a seller).

     The larger trend is in the balance. It’s time to pay attention. The Chicago daily price settled firmly below the 60-day, Box-o-Rox moving average, so the board has a “Proceed With Catch-up on Incremental Sales” message flashing. It’s only an indicator, but the idea is to be patient with up-trends, and aggressive with down-trends, year-in and year-out.

When we look back at this week, it is likely to be a key point in this year’s market pattern. Stay tuned.

Stay tuned.

MarketBullets® Monday, June 10, 2024 : Pre-Dawn

     The most recent Commitment of Traders Report shows Chicago wheat big specs have renewed their short-sold positions back to -18,121 from -5,415 in mid-May.

     Turkey’s announcement Friday of import bans specifically for wheat from June 21 to October 15th in order to “protect local producers amid price fluctuations” Average annual wheat imports to Turkey have been just over 7 million metric tonnes per year for the last decade, which, if entirely eliminated (unlikely) is about 3.4% of total global wheat export business. It is a small price-negative for current wheat traders; sufficient to make the market take notice, but not enough to cause significant disruption. This kind of announcement smells a little like a government agency head placating some angry producers and trying to influence the global market down a bit.

     The U.S. Dollar Index posted an unusual upside day on Friday, engulfing the previous day-session. The dollar jump was sponsored by a quick yield-surge in the 10-year Treasuries on a strong nonfarm payrolls number for May, leading to ideas that the Fed may delay any rate cuts. This is a good example of “market noise” and a minor move on the longer-term charts…a mild wheat price negative.  

     U.S. wheat harvest is gaining momentum, less likely with every passing day to get interrupted by rain. Yields are slightly above expectations so far.

     Pre-Dawn Monday wheat trade was lackluster after midnight, with Chicago down about 4 cents, KC HRW down about 9, and MPLS spring wheat contracts down 2-3. Indications were that Paris milling wheat, often a market leader, would open up about €2.00 (approx. +$.06).

     The up-trend is troubled, but has not broken major support yet. An appropriate (ratio) bounce from present trade would bring the July Chicago contract back up about 30 cents. A failure to hold above $6.07 would be a display of weakness and could trigger capitulation. It would certainly slow country movement of wheat toward the terminals. Meanwhile, the current trade is about a dime above our Box-o-Rox 60-day moving average at  $6.15, a rude and crude indicator of upward tendency, unless it breaks below that mark.

     ‘Tis just a little test of patience!

MarketBullets® Thursday, June 6, 2024 : Close

     The Agriculture Market Information System (AMIS) is composed of G20 members plus Spain and eight additional major exporting and importing countries of agricultural commodities. As of June 6, their estimates of wheat production yielded the following: 

• Wheat production in 2024 falling fractionally below (0.1 percent) the 2023 level. Potential output declines in the EU, Türkiye, the UK and Ukraine, to be offset by increases in Australia, Canada, India, and the US.

• Utilization to contract by 0.8 percent in 2024/25, stemming from lower feed and other use, mostly concentrated in China and India.

• Trade in 2024/25 (July/June) forecast to decrease by 1.2 percent, driven by lower import demand from China and the EU, along with smaller exports from the Russian Federation, Ukraine, and Türkiye.

• Stocks (ending in 2025) predicted to decline by 1.6 percent below opening levels, largely due to a significant drawdown in the EU, along with smaller decreases in Kazakhstan and the Russian Federation.

AMIS is one of several global entities tasked with monitoring agricultural statistics. Some others are USDA (NASS, ERS and FAS), International Grains Council (IGC), Food and Agricultural Organization (FAO). This is not a comprehensive list, but a few of the most recognizable .

     The First technical support in Chicago July futures at 38.2% retracement of the full upward move since the first week of March didn’t even slow the negative momentum. That has created a string of 9 negative trading sessions in a row and an 88-cent air pocket. We are looking at -50% of the total upward shot at this point. The next point at which to expect the market to be at least moderately sensitive is the 61.8% line at about $607. The market is expressing weakness and reflecting some real country movement of wheat that had been hold for many months. That is sure to abate soon, even the “easy wheat” that always gets sold in the first weeks of harvest to pay bills.

     Any weather report that shows Russian still in drought trouble will impact this market quickly, so volatility is bound to be our constant companion for some time yet.  Its going to get hot this week in the PNW and across the Midwest, turning green wheat gold as it pushes the harvestable wheat line north.  

     The intermediate-to-longer-term trend is still defined as positive, but the margin of error on that determination is shrinking fast. A failure of the 61.8% line (another 25 cents below Thursday night trade) would be a sign of market capitulation and abundance of wheat for sale in the world. That is within radar range.

Stay tuned. Stay loose and ready.     

MarketBullets® Wednesday, June 5, 2024 : Pre-Dawn Update

     Wednesday pre-dawn trade in all three U.S. wheat futures contracts traded in a narrow band until just after 3 AM PDT when they began to fade, down 3+ cents by 3:20.  That puts Chicago within easy trading range of the obvious support line at about $6.50. Wednesday may prove to be a challenge for the defenders of that 38.2% retracement line. Chicago July has dropped 45 cents from the 10-month high close at $7.00 on May 28.  

     Texas and Oklahoma have been finding higher-than-expected yields.

     Paris Milling Wheat has lost its mojo over the last 4 trading sessions. The front month contract (September) has closed within a €.75 ($.02) range every day since last Thursday May 30. This contract is the most representative of European milling wheat, including Russian and Ukrainian.  

     In its latest international tender, Egypt bought 470.000 metric tonnes of wheat, none of which was from Russia, a change in pattern for Egypt, the world’s largest importer of wheat most years. Romania, France, Ukraine and Bulgaria had the successful offers.

     Australian wheat is a long way from the bin, but the forecast from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) June Australian Crop Report is for 29.1 million metric tonnes of wheat to come out of this crop year on a 3 percent increase in wheat planted area.  

Queensland and New South Wales are expected to produce a large wheat crop, even as Victoria, South Australia and Western Australia decline slightly.

     The market is still in an uptrend according to the orthodox definition. The way that this market behaves in an encounter with the big technical support lines at $6.50 and then $6.28 (5 to 27 cents below pre-dawn Wednesday trade) will reveal what kind of longer-term strength is present.

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday, June 4, 2024 : Pre-Dawn Update

     The primary fundamental driver for the wheat market is Russian crop losses to maturing wheat, starting earlier this season with frost damage, followed now by dry conditions that do not allow large regions of Russian wheat production to recover. It is not beyond the Russians to overstate such statistics to promote higher prices, as the global markets have no easily available way to verify, but there are rumbles that there will be more official reductions in production estimates.

     The U.S. Dollar Index is sliding downward into the middle of its 18-month trend channel, not a trend change, but a mild price positive for global wheat sales. The Chinese Yuan is steady-to-weaker, trading near its weakest levels since 2008. The Russian Ruble is gaining incremental strength versus the dollar. When crossed with the Chinese Yuan, the Ruble is steadily gaining strength, making wheat sales to China more costly when expressed in Yuan.

     The wheat price trend as expressed in the bellwether Chicago Soft Red Winter wheat futures is positive, but has encountered some selling at current levels. If the sellers are persistent, the short-term movement will tend to be negative, but it will require considerable declines to break the trend Channel. Longer-term prices will be based on harvest results due in the next 60 days.

     The People's Republic of China (PRC) and Russia reportedly disagree about economic issues such as the proposed Power of Siberia 2 (PS-2) pipeline despite publicly portraying themselves as diplomatically aligned. See article <here>.

https://understandingwar.org/backgrounder/ukraine-conflict-updates

MarketBullets® Monday, June 3, 2024 : Grains Closing Update

     Chicago July contracts traded a wide range, with a high well above the highs of the last couple of sessions, very near the magical $7.00 level and then the lowest close since May 20. KC Hard Red Winter (HRW) and Minneapolis Hard Red Spring (HRS) did nearly the same pattern. The market apparently ran into some willing sellers, probably some of whom were producers. The wheat trend is still upward, but is contending with some available supply that had been holding for a few weeks, plus early harvest sales (the “easy” wheat). The support is still crop shrinkage in Russia.  

     Intermediate technical support shows on the Chicago wheat futures charts as $6.50 (the lows of mid-May).  

     PNW winter wheat crops reflecting good-to-excellent ratings: WA 48% versus 48% last week. OR 54% versus 59% last week. ID 68% versus 67% last week. National winter wheat 48% versus 49% last week and 36% last year.

Spring wheat condition in WA 56% good-to-excellent, 55% last year. ID 72% versus 57% last year. North Dakota 80% G-Ex versus 67% last year. Montana 56% versus 58% last year.

     Corn and beans still punching out new recent lows.

     Diesel is seeing new lows (click <here> for chart and data.

     Short-term (2-Year Notes) interest rates are declining, reflected in higher note prices (Click <here> for chart.

     The trend is still positive, with current consolidation and correction underway. The fundamentals still are supportive, but wide price swings are expected.

Stay Tuned. Stay on plan.

MarketBullets® Monday, June 3, 2024 : Pre-Dawn Update

     The week just ended on May 31 was a negative net for wheat and other grains as well. The month-end results were still quite positive. See the weekly and monthly Summary below. Monday pre-dawn had Chicago wheat up 8-9 cents, KC up 6 and Minneapolis up 7-8, setting up a positive day-session start.

     Harvest in Kansas is rolling. The south and southeast soft red winter wheat is also coming in.

     The world is apprehensive about available wheat supplies going forward, a reflection of historically tight global stocks. With northern hemisphere harvest in its early stages when crops start to be measurable, the market is not under short-term stress, but there is vulnerability still for green wheat in the mid-to-northern tiers of latitude.

     The charts show the tone has not changed since the new upward trend was initiated in the first week of March, now 60 trading days old. As of Sunday PM heading into the new week, the Chicago price of wheat was trading right on top of the 60-session positive mean line, a position of confidence.

     The Russian Ruble has been strengthening (Rubles per USD falling) for 7 weeks, not yet to any new value out of the year-to-date range, but will be threatening the low side, as it rides down the negative slope of its 9-month price mean. Ordinarily this would mean their wheat is getting more expensive, but they have not been using any conversion to the U.S. Dollar to price their wheat sales of late; something about sanctions…  In the last 60 days the Russian Ruble has been getting progressively more expensive in Chinese Yuan terms, making their wheat prices rise to their best customer, even as their quality has come into question. This story line bears following.

     The trend in wheat is still upward, although there have not been any dramatic, impulsive sessions since May 20-22, when Chicago gained 50 cents in three days. If the pattern that has sustained the longer move is to be continued, we should be expecting some more upside soon. If not, and the market sags back lower, the downside target of a 38.2% ratio retracement is still some 60 cents below Monday pre-dawn trading levels. It takes quite a bit of patience to hold against such a dip, especially as harvest looms. There is sufficient justification to release an increment of wheat into the maw of the market here (particularly old-crop), but there is still upside potential, if one has the stomach for the ride.

Stay tuned for more of the saga. Good hunting.  

MarketBullets® Friday, May 31, 2024 : Pre-Dawn Update

     The wheat market’s behavior in the pre-dawn hours of Friday is one of indifference. The trading volume is very low and the current price range is well within the high/low range of Thursday.

     Chicago is up 6 cents from Thursday’s closing settlement price, which was itself down 11¾ cents.  KC is up 8¾ cents, but did print a  brief high just outside of the previous day’s range. Minneapolis HRS is up 8½. None of the grain markets are blazing any new trails in the wee hours of Friday morning. We may be about to end the holiday week with on a null.

     The European Union is moving to impose tariffs on the import of wheat and other grains and ag products on Russia and Belarus to begin on July 1. This is coming as military aid to Ukraine from the EU is being boosted. The tariffs are not likely to loom large in the overall scheme of global wheat markets, but but they do console French and German producers. The trend toward more European support for the embattled Ukrainian forces is slow to emerge, but the realization that control of Ukraine’s ag sector by Putin is a long-term threat to European end-users and producers as well as other global ag interests. Food and energy (natural gas) are far more effective weapons than a pile of nuclear weapons in the global influence arena.     

     The fundamental trends that have sponsored the powerful wheat price rally of recent weeks are still in place. Russian crop forecasts continue to harp on shrinkage, although it is notoriously difficult to  verify the actual numbers, not because of any recalcitrance by Russian authorities, but because wheat is hard to kill.  Freeze damage can appear to be nearly a total loss and those plants may still recover, but that depends on one factor; timely rains. This is a big part of the reason we have seen such urgency in wheat prices. The other BulletPoint has to be about capital movement, as funds short-covering has been a high octane accelerant that has inspired others to buy due to FOMO (Fear Of Missing Out).    

     The trend is still upward. Friday morning trade seems unlikely to produce new perspective.

     Stay tuned. It’s quiet for the moment, but there will be more data later

MarketBullets® Thursday, May 30, 2024 : Quick Update After Wheat Close

     Wheat is in corrective technical mode. As time passes and crops become more visible, the market is adjusting some of the crop condition risk out of the price. Weather will continue to be the dominant fundamental factor for some weeks to come, but as northern hemisphere harvest advances the potential for loss recedes.

     For the moment, the wheat charts show a retrace and re-calibrate pattern.

     Diesel is at new lows dating back to June of 2023.

     Crude oil, Gold, Copper, and Natural Gas prices are all in mild pull-back patterns, so wheat is in harmony with overall short-term market risk-off sentiment.

     Initial retracement target for Chicago wheat is at roughly $6.50 (38.2%, about 30 cents lower than Thursday’s close). If this price holds, the technical attitude will be that the uptrend remains intact. If the next ratio is achieved on the downside at $6.05 or so, the tone changes to weakness.

     The trend is still defined as positive, but there is still a reasonable argument to make incremental sell contracts.

This stuff is trackable. Let’s track it!

MarketBullets® Thursday, May 30, 2024 : Pre-Dawn

     It appears that India is preparing to import some wheat this year, as they are going to lift their hefty, 40% import tax. The replenishment of their wheat reserves will be from Russia with love, probably.

     Crop conditions in the U.S. showed slight declines in Hard Red Winter (HRW) and Soft Red Winter (SRW) but a couple of percent better for PNW white wheat.

     Word on the street is that European spec traders are continuing to add to net long-bought positions in wheat futures. Chicago big specs remain slightly net short-sold, having added back some sales that had been covered the previous week.

     Weather forecasts are for warmer than normal in Russian wheat country over the next 10 days, even as rain is expected in Kansas and Texas in the next week. Some of the HRW country that is expected to receive moisture is already in harvest, so the effect is to slow thrashing and possibly cause some lodging or sprouting if it becomes excessive. The wheat price is supported by the current set if weather models.

     U.S. Corn planting progress is at or ahead of normal pace at this point. Brazilian Second corn harvest proceeding without hinderance, with moisture still welcome for some still maturing regions.

     The price trend for wheat is upward, with the most recent trading very near the positive-tilt, 58-session mean line dating back to the lows in the first week of March. The last 7 days of active trade have changed the price very little. The longer this pattern is sustained, the more it will become a kind of “support base” on the charts from which to launch the next move. Retracements back down to the $6.30 area (about 50 cents below current) would not break the trend, if that level holds.

Stay tuned.  

MarketBullets® Wednesday, May 29, 2024 : Pre-Dawn

     Sunday evening’s hot shot in wheat faded into the day session, leaving wheat prices well below the long-term highs printed in pre-dawn trade.

     The wheat market has found some equilibrium over the last few sessions, with stable volume and range patterns. The upward trend channel is now 56 trading sessions old. The large Speculative fund category of traders in Chicago wheat has cut their net short-sold positions to the smallest they have carried since late October of 2022, and then re-added some, creating a plateau that suggests at least a pause in the shift toward the long side (see Chicago weekly chart below). The implication is that the market requires some time to re-calibrate and consolidate before launching the next leg of price movement.

     Russia’s Institute for Agricultural Market Studies (IKAR) released an update to their Russian wheat production estimate, 2 million metric tonnes to 81.5 million on Monday, May 27. SovEcon, a private ag analysis firm in Russia, also reduced their projection by 3.6 MMT to 82.1 MMT. The trend for reduction in Russia’s wheat production estimates has inspired spec trading firms in their short-covering rush in recent weeks. There is talk below 80 million tonnes. Ukraine is also vulnerable to crop losses due to weather, and war will continue to be a supply-disruptive factor. The weather from now through June will be the dominant wheat price factor pushing outside capital into wheat.  http://ikar.ru/1/en/press/

     The wheat price trend is still upward, subject to a “correction” and consolidation period coming up. The duration and intensity of this period when it emerges will be a solid clue to the next phase. We are back to testing the patience of alert marketers and traders of wheat.

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday, May 28, 2024 : Pre-Dawn

     Wheat opened in U.S. exchanges with a bang, following the lead of Paris Milling Wheat which traded a full session Monday, as U.S. exchanges were all closed for Memorial Day. The 20+ cent pop almost certainly was on the continued stress on Russian crops due to hot and dry conditions over the weekend and in revised forecasts. The entire wheat complex has jumped in response. It begins to look like a runaway market, including high volatility.

     The wheat futures price charts all display a “gap opening” for Tuesday’s session, a phenomenon that suggests very powerful buying interest at the bell. Gaps are produced by an opening trade higher than the previous sessions highest price, leaving an untraded space on the daily charts. This is also a pattern that tends to mark retracement points to which the market very often returns to “fill” the gap at some later date. There is no rational argument for this phenomenon, except that a great many traders believe it will happen, but happen it does. It is a sign of price strength, at least for the short-term.

     The trend for wheat is upward, with the weatherman in charge for the moment. Certainly there are other factors, but none that have the power this time of year.

     There is money moving into wheat, whether that comes from end-users who fear price allocation will make wheat more expensive due to shortages, or if there are large trading concerns that are re-allocating funds from other markets to commodities in general, with a little, billion-dollar slice reserved for wheat. This factor, always lurking in the background, will be evident in the Commodity Futures Trading Commission’s Commitment of Traders (COT) reports issued every week based on aggregates of required position reports submitted by every trader that takes large positions in various futures contracts. The data is a “lagging indictor”, but it does allow assessment of the structure of the markets. Watch this space for more detail.

     We closed the comment on Friday’s close with, “No one will criticize selling some wheat here.” That statement still stands, even though the price-pop makes it logical to hold. There is no way to identify a top here and no sell signal has been generated. The orthodox approach is to stand pat until it is proven that the trend is changed to negative. Right now that implies waiting for a decline of more than 38% of the upward move that started in March, some 50-60 cents below current. That is the way the trend pattern breaks down, and that is why there will be no raised eyebrows at coffee when you say, “I sold some”, even knowing that there could be more upside to come.

     Stay tuned, as the story unfolds.

MarketBullets® Friday, May 24, 2024 : Weekly Close (No markets Monday - Memorial Day)

     The Weekly Review summary numbers are all green, including Paris, Corn and Soybeans. There is enough pressure on producers to sell some wheat that had been sitting on the table waiting, allowing COT commercials to liquidate some of their net long position (The Commercials always tend to sell into rising markets until they reach their largest net short-sold positions at the high). Their current Chicago net is a relatively small short of -12k contracts, versus long-term historical highs between -40k to -50k. They commonly use the futures and options to cover obligations in forward cash contracts until they acquire the physical deliverables. As a general principle, they do not speculate.

     Wheat prices held onto the gains of the week heading into a 2-day Memorial Day weekend. No markets Monday, but it is a weatherman’s audience. Tuesday morning will have to adjust to any weather that deviates from what the models said on Friday, so it is not a gimme. Watching western Russian wheat dryness, Brazilian floods in wheat areas, and possible rains in U.S. Hard Red Winter states far enough north that there is still some green wheat to fill. French wheat is in moderate condition versus recent past years, at 63% Good-to-Excellent condition.

     U.S. old crop wheat export shipments are at 97% of projected marketing year totals, wIth only 8 calendar days to catch up the balance (the market already knows this). Russia has shipped 46.4 million metric tonnes Year-to-date, a considerable increase over last year, but the new crop is suffering, so the next marketing year’s total will almost certainly be smaller.

     Trading funds are approaching net even after having covered a relatively large short-sold positions over the last month. This short-covering was a significant part of the lifting power that has brought us up 40-60 cents in U.S. futures and plus-30 cents in PNW white wheat in the week just ended. The next phase will be dependent on production issues or war, as the funds will likely be more cautious building a new position on the long side.

     The wheat complex has absorbed the fundamentals and priced them in. When supply or demand data is available, it is already baked into the current price. It seems the easy money is in-hand. Now we will be the weatherman’s pupil.

     The trendline is up. Intuition says the move is maturing, so there is a strong temptation to sell physical wheat, both old and new crop. No one will criticize for selling some wheat now, even if it breaks the “Don’t guess at the top” rule. If it itches, scratch it! Just remember whatever happens in Russia, more drought or timely rains, it will be a humdinger!

     Have a good weekend, use the sunscreen and take a minute to say a Thank-you to those who have fought for us.

Market Bullets® Thursday, May 23, 2024 : Close

     Memorial Day Weekend ahead, with no grain markets on Monday, May 27th. With month-end and long weekend coming, it would be no surprise tomorrow-Friday to see short-term profit-taking take back some of the recent gains. This is probably not a large market event, but it would seem foolish for a short-term trader to leave money on the table in this market. Producer selling is likely to follow the same path if they have been thinking about it for a week or so. The temptation to sell what appears to be the high end of a good rally is easy to rationalize. The trendline is still positive, so for the stubborn (You know who you are), there will be a little weather-watching over the weekend.

     Tomorrow’s pre-weekend session may just be a dud, as many market participants are leaving early Friday to be at the river with the family. Even the headline writers are likely to sneak out.

     10-day weather forecasts for Russia’s previously dried out wheat-producing  southern regions show chances for rain, but it may be a bit late in coming.

     From USDA/ERS: “The number of farms producing wheat for grain declined substantially from 2002 to 2022, according to new data from USDA, National Agricultural Statistics Service (NASS) 2022 Census of Agriculture. In 2022, the number of U.S. farms reporting wheat production was 97,014, a 43-percent decrease compared with the 2002 census, when 169,528 farms reported wheat production. The reduction in the number of farms producing wheat was spread across all classes of wheat. The number of farms producing winter wheat—84 percent of U.S. wheat farms in 2022—dropped by nearly 60,000, or 42 percent, between the 2002 and 2022 censuses. Farms producing durum wheat decreased by the largest percentage, down 59 percent from 2002. The number of farms growing spring wheat (other than durum) declined 43 percent from 2002 to 2022.”  https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=108898#:~:text=In%202022%2C%20the%20number%20of,across%20all%20classes%20of%20wheat.

     The trendline is still upward. Unless there is dramatic weather forecast for dry in Russia and Ukraine, or even Western HRW belt, Friday is likely to be mixed or negative, just on short-term profit taking. Next Update Pre-Dawn Friday AM.

Stay tuned in, tuned up and turned on…    

Market Bullets® Thursday, May 23, 2024 : Pre-Dawn

Tunisia has bought some durum from Italy…Now there is a market-mover!

     Russia is facing some recent frost damage followed by excessively dry conditions, a bad combo, as wheat can usually recover from cold damage if there is enough moisture and steady temperatures, but that is apparently not the case this dry week in Russia. Street talk sez new estimates around 80 million metric tonnes from Russian production, down from 93 million tonnes only a few weeks ago. It’s all pretty sketchy, as accurate estimates of production loss are not reliable until later stages of development.

     Meanwhile the global wheat market is already on high alert, as end-users have been trying to catch up on purchasing schedules in a rising market. Russia, the world’s discount house for wheat, is not beyond overstating crop damage to sustain export prices, but there is also a wave of producer selling in the U.S. and elsewhere that will probably be responsible for whatever technical price retracement occurs in coming days. The picture is becoming confused, but the timing is ripe for setbacks. If the wheat market shows enough buying energy to overcome the surge of selling, then the technical objectives are not a long way above current prices, like maybe another run at the $7.20 area. Using Chicago as a measuring canary, 38% of the recent upmove shows a normal downward objective at about $6.50 (40 cents below Pre-Dawn trade in July contracts) that does not disturb the upward channel. A failure to hold above that first downside level suggests the next ratio level at 61.2% or $6.06 per bushel (80 cents or so below Thursday very early trade). Chicago did manage early Wednesday to kiss the 78.6% upward target, a ratio known as a killer of intermediate price moves.

     The post-short-covering market has baked in some Russian crop loss premium. There is no solid recipe for this guesswork. When any real data emerges the market will have to react the same way it does to a USDA report, basing its action on the accuracy of previous guesses. Whotta game! For now, we may be running out of buying fuel. It does take quite a bit of buying power to move the entire global wheat complex the way it has over the last two months, so we may be seeing some signs of exhaustion.

     The trend line for wheat is still positive and the spring silly season is far from over.  Early trade in Chicago wheat showed negative 2 cents after 3:AM Pacific, not a scary action. Stay tuned to this channel for the next chapter.      

PS you know the AI will never mix metaphors…

Market Bullets® Wednesday, May 22, 2024 : Early AM

Pre-dawn wheat in Chicago futures up 16½ at $7.14 (highest since August of 2023), KC up 14, MPLS up 12. Paris Milling Wheat up €.50.

Interest rates steady - 2-year Notes at 4.867%. No alarm bells ringing.

Chinese Yuan steady to stronger even with some intervention effort at softening.

Russian Ruble vs USD sitting on 9-month chart mean line with slightly stronger tilt.

Crude Oil steady/slightly lower on 23-month lower trend channel.

Diesel hovering near 11-month lows.

Gold continues to challenge all-time highs. Most recent new high May 20th at $2,454.20/troy ounce

Copper still challenging all-time highs in powerful upward channel.

The overall global wheat market environment is anxiously higher. Now we have to watch Iranian special elections as well as our own. Weather is dominant in the news, but so far all estimates are just that. Actual damage to Russian wheat has not been measured (according to IKAR).

The trend is up. Holding for signal. Experience sez it’s usually better to miss the high on a defined sell signal than to guess and pick a top.

Stay tuned.               

Market Bullets® Tuesday, May 21, 2024 : Close

      Tuesday gave us a new Chicago Front-Month high close dating back to August 11, 2023. KC Hard Red Winter (HRW) managed a plus-seven-cent close, also a new high back to September 2023, and Minneapolis Hard Red Spring (HRS) futures closed in the middle of a cluster of 7 sessions with six daily highs within 6 cents of each other. HRS has been the weakest of the three major futures contracts in the last 10 weeks, but is still participating in the general wheat uptrend. PNW Soft White Winter (SWW) acknowledged Monday and Tuesday with a 15-cent jump today to $6.80 through August delivery. That’s 25 cents up since last Friday end of day.

     The trend is up. There is no sell signal. The probability of Chicago reaching a common retracement ratio of 78.6% of the most recent major decline is increasing. That marker is at about $7.21, about 20 cents above Tuesday’s close. There is always another target, no matter how high or low a market may go. These technical points are all “next targets” until they become “pattern completions” or “failures”. It is counter-intuitive, but the best long-term results require seeing at least one technical failure before stepping away from a trend position.

     The momentum of the current upward move is still rolling, but we are at the point where intuition says there is a “correction” due. This does not mean bail out, only to be alert for changes. Hitting the very top with a sale is mostly chance, but gaining profit by having a defined set of conditions for a trigger is good planning.

     The weather trend for large areas of Russian wheat is adverse; too dry following frost damage for winter wheat, and too wet for their spring wheat areas. This is not the only driver for the current wheat rally, but it lit the fuse under the funds to cover shorts and reverse to net longs. If weather continues to produce crop-shrink, this could get interesting.  

     Price volatility pushes option contract prices higher. It is also a self-correcting market behavior, as margin requirements are increased and whipsaw movements erode capital. The “small trader” category reported by the CFTC’s Commitment of Traders (COT) reports had been increasing in size. This category is notorious for being on the wrong side of the market. At present they have been selling out of a net long position and adding short-sales.

     Hang tough. Patience is paying off, but let’s not miss an opportunity due to stubbornness. A well-defined exit plan for an incremental slice is always a good idea.   

Market Bullets® Tuesday, May 21, 2024 : Early AM

     Monday’s wheat trade in Chicago saw prices up 36¾ cents to $6.88 at the close, the largest single-session gain since July 24, 2023, when Chicago front-month wheat futures reached a high of $7.57½ on Russia-Ukraine war escalation. Russia was attacking Ukraine’s grain export facilities, while Ukraine struck back with drone attacks inside Russia’s border. This has become “old hat” since those days, but war is still capable of stirring the market.

     Monday’s closing settlement was also the highest close since July 28, 2023, 208 trading sessions ago.

     Crop condition estimates and comments from various sources are consistent only in that there is possible damage to Ukrainian and Russian wheat from cold and now dry conditions. Wheat often recovers from cold damage if moisture is delivered in a timely pattern, so the real question is precipitation in the next week or three. FOB values for Russian exports have been in a rising pattern, not a shock in upwardly mobile global futures markets.   

     PNW Soft White Winter (SWW) wheat ratings as of May 19 declined, with Idaho dropping from 68% to 62% Good-to-Excellent (GEx), Oregon from 67% to 59% and Washington from 46% to 43%. Cash prices did not react to Chicago’s strong pop on Monday, steady at $6.65 coast thru August delivery.

    In pre-dawn trade, Chicago was a few cents on both sides of unch in low volume. The infamous “Turnaround Tuesday” is dead ahead. If the market is able to overcome this superstitious speedbump, it will suggest more strength. We are at a sensitive point this week, where in the past there were price congestion zones, and the price of the front-month Chicago contract is in between key chart ratios and support/resistance levels. The upside ratio target is about $7.21 (31 cents above current) and the first downside objective would be $6.30 (60 cents below). The trend will still be definable as upward as long as we do not fail to hold above that downside level.

     The 60-day moving average (Box-o-Rox) is a full $1.00 below presently trading prices. The “rule” for that condition is “hold up incremental sales until there is crossover of the price to below the average”. This is a crude indicator and can be improved in several ways, but it is intended as a benchmark only.

Stay tuned. There are “interesting” trading days ahead.   

Market Bullets® Sunday, May 19, 2024 : Early AM

     Yup, gold is at a new all-time high in pre-dawn Monday trading. So is copper. Wheat is still in a now-51-day-old uptrend that seems to be defying fundamental logic as we head into a better northern hemisphere harvest than we have seen in years. The charts show Chicago Soft Red Winter (SRW) wheat futures sitting on top of the mean line of that upward channel, not even sweating or huffing and puffing. KC Hard Red Winter (HRW) wheat is also parked on top of its own rising 11-week-old mean line, and setting up for the trek back to its 198-week (almost 4 years) mean, a dollar per bushel higher. Minneapolis Hard Red Spring (HRS) is the weakest of the three major U.S. futures contracts, but is challenging the top end of a downward channel that has contained spring wheat prices for two years.

     Will the new, refreshing upward tendency be sustained? We have used up the fuel in the first stage rocket, that is (was) the large net short-sold positions that had dominated the money funds positions since October of 2022 in Chicago wheat. The next boost has to come from weather problems, or some international anxiety created by war. The chart guys are watching the wheat complex as it reaches some very powerful inflection points. Eventually there will be a setback. The market never goes very far in any one direction without a check-and-recalibrate move that confirms and refreshes the internal market structure. These things take time, and are usually in proportion to the previous and usually larger scale move, which in this case is defined by an historically long downward trend. The fundamental factors (mostly production this time of year) are unable to help much with marketing decisions which by default are timing decisions.  

     It would be foolish to ignore the supply and demand figures, the ongoing weather models, or international trade machinations, but the real price of wheat is forged day by day, hour by hour, from the actual money decisions by all of the market participants, not just the money movers, but the commercial firms, thousands of cash traders and producers, and end-users who must seek coverage of the needs of their customers…billions of hungry people. The charts are the only practical way to read the patterns created by the living market. The mill that continuously grinds out prices is not subject to easy manipulation, although there are some who aspire to control it (see Russia V. Ukraine).

     The trend is still upward. A proportional setback is to be expected, but is not likely to terminate the upward channel. Meanwhile we try to keep our nervous fingers off of the throttle and let the trend work for us. The marvelous thing about incremental sales of wheat is that it makes it possible to be patient, knowing that the livelihood is not all on the table at any given moment. We all bear a stubborn streak that allows us to hold on through ugly price moves on the way toward the highs, but that same characteristic is the one that causes us to hold on too long. The conundrum is how to know when to turn loose of a piece of wheat. Incremental sales ease that stress. The object is to be above average year in and year out. In the long run that is the source of power. Selling the highs every year is a “will o’ the wisp”, which leads to loss.

     The Chicago wheat charts give us some downward retracement price targets between $5.94 to $6.30, about 35 to 70 cents below current trading. In this wide range there will be several inflection points. These retracement levels are dependent on the high/low range that allows them to be measured. A move back to the higher of the two downside targets followed by a return to the high end is a strong market. A return to the lower target is weaker. All we have to do is watch it unfold.     

This stuff is trackable. Let’s track it!

Market Bullets® Sunday, May 19, 2024 : PM (Considered part of Monday’s data)

Noticeables:

·         Chicago wheat opened on a small chart gap, with 1st 30 minutes of evening session trade on Sunday, May 19 starting at $6.54, a couple of cents above the high of the final 30 minutes of Friday’s session. This is not a “BFD” (Big Deal), but is a vigorous, +10 cents start for the new week. KC did not gap, but was up a dime and Minneapolis was up about 8 in the same 30-min.

·         **FYI: Variable charts referenced above, parsed in minutes instead of days or weeks, have caused more trouble and loss among small, short-term traders than any other single bit of data technology. They practically did not exist before computer charting systems with streams of data to drive them were created in the 1980’s. Variable charts tend to lead us to make conclusions about the market direction based on microscopic segments of time, kinda like searching for trees in the forest with a magnifying glass. For most of us, they are best used to help assess market character and tone, and not outright trading decisions.

·         Gold is closing in on a test of the April 12 all-time high at $2,448.80 per troy ounce; trading at $2.445.00 Sunday PM.

·         Natural Gas (60% to 70% of the cost of production of anhydrous ammonia) is hitting new highs dating back to its November 2023 range.

More later.

Market Bullets® Friday, May 17, 2024 : Early AM

     From US Wheat Blog: Even with variable crop conditions, the 2024 Wheat Quality Council (WQC) Hard Winter Wheat Tour has estimated a total weighted average yield of 46.5 bushels per acre (bu/a) across its annual tour routes in Kansas with swings into southern Nebraska and northern Oklahoma. The tour yield estimate is up significantly from its 2023 estimate of 30.0 bu/a.

     Sixty-nine participants this year from government, universities, media, grain trade, millers, bakers, and farms stopped at 449 fields to evaluate yield potential and crop conditions. 

     Looks like wheat importers are waking up a bit. US weekly net sales of wheat for the 2023/24 crop year totaled 78,500 tonnes in the week to May 9, up 91% from the previous week and “noticeably” from the prior four-week average. 50,000 MT sold to Yemen… Rouen milling wheat exports were up 23% on the week, to 110,691 tonnes in the week to Wednesday May 15, according to data released by port operator Haropa. The Turkish Grain Board (TMO) has announced an export tender for a total of 75,000 tonnes of durum wheat for loading June 6-28...

     When any market continues to rise, even in the face of little or no obvious bullish news, it tends to stimulate buyers.

     The last four trading sessions in Chicago Soft Red Winter wheat futures produced four intraday highs followed by closing settlements that were well below those highs, a small detail that implies the market is uncomfortable at those highs. Three of the highs were within 3 cents of each other, and all were from 7 to 23½ cents above their respective closing prices. Just a little technical whisper that there are sellers lurking just above the range highs.

     The trend is still upward, as Thursday’s pre-dawn trade saw Chicago July up 8-9 cents, KC July up 7, and MPLS Hard Red Spring up 7-9. The night trade is at considerably lower volume and intensity than the day session, but it sometimes fore-shadows the day session opening.

     The 50-session geometric mean line is 23 cents below the price just after midnight going into Thursday. A setback to that level would not break the trend. “Regression to the mean” is a normal market behavior.                                                                                 

     This stuff is trackable. Let’s track it!

PS: China is beginning to look closely at GMO wheat varieties with disease resistance, and has OK’ed a couple of varieties. Countries growing GMO crops are: Argentina, Australia, Bangladesh, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Czech Republic, Honduras, India (Bt cotton only), Malawi, Mexico, Myanmar, Nigeria, Pakistan, Paraguay, Philippines, Portugal, South Africa, Slovakia, Spain, Sudan, eSwatini (Swaziland), United States, Uruguay, Vietnam, and Zambia.

There are currently just 10 GMO crops in the United States, and wheat is not one of these 10 crops. There is no commercial GMO wheat available.    

Market Bullets® Wednesday, May 15, 2024 : PM

     The wheat market did some acrobatics on Wednesday, with a powerful spike to new highs early in the day session. Chicago July was up 25 cents within the first 10 minutes of trade, then in the following half hour dropped 24 cents. Market observers were scrambling to make sense of the whip-saw move. Russian private analyst Sovecon had released a new production estimate for Russian wheat that was 3 million metric tonnes lower, and India is on the threshold of becoming a serious importer of wheat this year. Both of these wire items must be taken with a bit of salt, but the market did respond to them. The swift break back to unchanged or lower, regardless of fundamental shenanigans, was a clear warning of a setback in the making.

     The broad brush fundamentals of wheat production in the northern hemisphere are still showing a better crop than last year, but also still in a global stocks position that is tight by historical standards. The charts are in charge here! The money movers have covered most if not all of their previously sold positions, a shift in perspective that has been a long time coming. The pressure to “go long” versus that of covering a previously profitable trade before it becomes a liability is very different…much lower!

     Early trading on Wednesday evening (part of Thursday’s chart) in wheat has been relatively calm as of this writing. The trend is still upward, but the pattern displayed during Wednesday’s session is a warning. This market can move very rapidly back downward if there is any hint of moderating weather. It looks like it will take a sustained series of legitimately estimated global production losses to trigger vigorous buying from this point. It is clear that U.S. wheat export offers are not going to capture any big sales in the next few weeks.

     This is where incremental sales in a marketing plan can take the pressure off. If the market cannot find enough new buyers to keep the strong upward slope intact, then a setback is in order. There is plenty of room under this market for a re-calibration to take place.

Stay tuned. At least it’s not boring!      

Market Bullets® Tuesday, May 14, 2024 : Early AM

The wee hours of Wednesday are seeing a steady gain in wheat futures, with some increased volume of trade on each upward swing. The meaning of such behavior is encouraging, but relating night trade to day trade can be hazardous. Still, the wheat market is apparently not finished with this run yet.

     There are definite dry conditions around the Black Sea and excessive moisture in Western Europe. The key for Black Sea crop stress conditions is that it is a very large and concentrated wheat production region, large enough that bad weather trends (dry and cold) can affect enough area to actually change global balance sheets.

     USDA’s attaché in Canada is forecasting Canadian 2024/25 wheat harvest at 33.7 million metric tonnes, about 1 million tonnes lower than official projections from Agriculture and Agri-Food Canada (AAFC) in their last forecast of 34.6 million tonnes.

     As of last month, millers are buying wheat at the lowest prices in three years, even as consumers are paying 23% more for flour.

     One highlight gleaned from crop progress reports to date: Kansas, the largest Hard Red Winter (HRW) wheat-producing state, crop conditions have deteriorated significantly, from 57 percent Good to Excellent (GEx) on February 25 to only 31 percent GeX as of May 12.

     The charts are portraying a “pause and reflect” period for the high intensity wheat rally that began in early March of ’24. It seems clear that the price increase has pushed most U.S. origin wheat out of competitive global pricing. The market needs to catch up to itself and consider the next leg on the charts. If the weather continues to erode expected yields, there may be enough perceived risk added to sponsor a further price gain. If not, and there are no other factors emerging to lead, a retracement should be expected, at least to 38.2% back down (somewhere near $6.34 in Chicago’s July contracts) or about 40 cents lower than pre-dawn trading on Wednesday morning. The trendline has become mature enough to hold up to such pullbacks, even back to 61.8% lower  (around 75 cents below current). Meanwhile there is no sell signal for  short-term speculators yet, and impulse marketing is not a good habit.

Stay tuned for the next chapter in the saga.                       

Market Bullets® Tuesday, May 14, 2024 : Early AM

     Winter wheat condition shows 18-states at 50% Good to Excellent (GEx) versus last year at 29% GEx. PNW states show WA 46% GEx, OR 67% GEx and Idaho 68% GEx. Spring wheat planting and emergence are running about 10% ahead of average. There is a wheat crop coming.

     The market is whispering that a short-term top is imminent. Tuesday pre-dawn trade was seeing lower volume of trade and less vigorous movement in any direction, often a sign of a market that has reached a pause. This profoundly does not mean a failure, but any trend of such intense energy as the one that has carried wheat prices up a dollar or more in a very short time commonly shows a sudden loss of wind in its sails just before correcting. This is a good time to be observing the tone and behavior of the wheat price for tells about the power of the next phase of price movement.

     If the weather turns favorable for wheat production, we could see a rapid retracement of half of the upward shot that occurred in the last 45 trading sessions. It is not easy to trade a post-short covering period in any market, due to whip-saw action and higher volatility to follow.

     Meanwhile, the trendline is positive, until its not. Probably a prudent time to back up and observe using longer-term charts, like weekly or monthly time frames, as they are not prone to such violence of movement as the shorter-term charts.   

     Orthodox traders are strict in their marketing plans. Stay tuned for further developments.    

Market Bullets® Monday, May 13, 2024 : Close

     Chicago July futures reached new high dating back to July of 2023 and a total gain of $1.34 per bushel since April 17.  KC Hard Red Winter (HRW) July futures also achieved a new high dating back to September 2023 that is a 38.2% retracement of the entire downmove since July of ’23. Minneapolis Hard Red Spring (HRS) July contracts hit its 38.2 percent retracement. All of these futures contracts have reached a key point that, if breached, will trigger more buying attention from spec money and push end-users to extend coverage.

     PNW Soft White Winter (SWW) is up $1.00 per bushel since April 17.

     The trend is upward, but the market is facing some key technical pivot points as well as what amounts to exhaustion of fund position adjustments out of short-sold to much smaller net shorts.

Stay tuned.

Market Bullets® Monday, May 13, 2024 Early AM Update

     Considering the tone of the wheat complex over the last couple of months; the large net-sold positions that had become a “normal” feature of the market configuration over the last year have been reduced, not eliminated, but cut drastically from their former glory. The fuel tank is not empty, but its time to start thinking about the next $1.00 upward. What would be the dominant driver for that run? We know the fundamental picture, refreshed by last week’s WASDE report, does not show compelling reasons to ration wheat via higher prices than the present levels. Certainly the growing conditions could shift significantly toward hot and dry, giving us a traditional early summer rally under a high pressure dome. Maybe some more dramatic expansion of war in Northern Europe or the Middle East could become truly disruptive of grain trade into large portions of the world. Global economics could shift into recession and/or deflation, an unhappy hour! If there are other factors with enough power lurking, they are not obvious. Our task becomes simple: We must measure the intensity of weather, war and money supply changes and watch the wheat price charts for cues. Meanwhile, it is appropriate to prepare to sell some wheat soon, on signal preferably (not so much on “hunch”).

     The 60-day Chicago wheat moving average (the equivalent of about 90 calendar days) is $.85 below pre-dawn trading in July futures, not an especially helpful gauge. There are two previous pivot points that were set on the way up to early Monday’s $6.67. These can be used to measure the power of any downward move just by the way the market honors them (or not). The first is at $6.28 and the second is at $5.93, and both correspond roughly to Fibonacci’s famous retracement ratios of 38.2% for the higher point and 61.8% for the lower. These will do to go on with as observation points and maybe for sales, but a retracement to the 38.2% price followed by a rise portrays a strong market. 61.8% shows a weaker market. This story is not told and no-one has the last chapter yet.

     There is an increasing temptation to sell early in anticipation of a high, but historically this kind of guessing approach to positioning has a poor track record. It tends to disrupt the careful and deliberate marketing plan and emphasize emotion over logic. The upward trendline is gaining credibility every day it continues. Preparation and Patience!

This stuff is trackable. Let’s track it!

Market Bullets® Friday, May 10, 2024 Weekly Closing Update

     USDA gave us World Ag Supply/Demand Estimates on Friday morning. Adjustments were within ranges of expectations, but the market barely tipped its hat as it rallied both before and after the report. The price for Chicago Soft Red Winter (SRW) wheat has climbed $1.21 per bushel in just 45 trading sessions since March 7th. The global price leader has emerged as Paris Milling Wheat, with the equivalent of $1.52 gains on a closing basis in the same 45 days. The wheat market has changed its attitude, now in a defined upward trend, right into the teeth of northern hemisphere wheat harvest.   

     USDA released the following on Friday:

     U.S. exports are projected at 775 million bushels, up 55 million from the revised 2023/24 exports, which remain at a 52-year low.

     U.S. all-wheat production is projected at 1,858 million bushels, up 3 percent from last year on higher harvested acreage and yields.

     U.S. projected 2024/25 ending stocks are 11 percent above last year at 766 million bushels, the highest level in four years, but the new figure was above the average trade guess 786 million, so the net trade was positive.

     Global projected 2024/25 world ending stocks are 4.2 million tons, down from last year at 253.6 million tons, the lowest since 2015/16.

     Along with the WASDE Friday, Private Russian analyst SovEcon, having consistently lowered production expectations over recent weeks, now sees 24/25 Russian wheat production at 89.6 million metric tonnes, a 3.4 million tonne cut, still above USDA’s 88 million tonnes.

     It’s too wet in Brazil and too dry in Argentina. Output estimates are still shrinking for corn and soybeans.

     There is once again decent rain forecast for KS, OK, TX and CO. They have had disappointments with forecasts in this region in recent weeks. Maybe this one will pay out.

     The currency markets have been in the news, but Ruble and Yuan are both stable on the charts, while the U.S. Dollar Index is just a little stronger, still in a 17-month-old sideways range.

     Diesel prices were weak Friday, closing at the lowest settlement price since June of 2022.

     Natural Gas (60%-70% of the cost of production of anhydrous ammonia) has been rising off of multi-year lows. Fill the tanks!

     Gold is still running hot, reaching back up toward the recent all-time highs around $2,448 per troy ounce with a weekly closing price at $2,375 following a setback from those highs. Inflation is still alive. **The underlying cause of inflation is not price gouging or wage increases. It is the expansion of money supply under the policies of the Federal Reserve and other central banks which makes currency values decline due to excess supply.

     This week has seen the wheat market racing higher, mostly on various weather issues around the hemisphere, but the short-covering by large money managers has probably been the sponsoring buyer source overall. The funds are still showing a net short-sold balance for U.S. futures, but Paris has gone net long. The pressure on funds to buy back shorts is much more intense than the pressure to build long-bought positions.  Once that pressure abates in days to come, this market will have to find another reason to rally. There is a top to this move approaching, so having a plan to deal with the next market phase is essential. More on this later.

Meanwhile, stay tuned and stay cool!   

Market Bullets® Friday, May 10, 2024 Early AM

     Brazil is a place that has a very long history of boom and bust, and their ag sector is right in the center. They are seeing flood conditions in wide parts of their soybean and corn production areas. For wheat this is not a market mover by itself, but it does make a sympathetic factor and is probably an underlying part of the last few days of positive wheat movement. The spring weather season is still in early stages of effect.

     Friday morning at 9:00 AM Pacific and 11:00 Central will see the release of USDA World Ag Supply/Demand Estimates, a regular monthly event that always provides some diversion to the trade, as various analysts post pre-report guesses of what will show up in the report. For this report, 23/24 US wheat ending stocks total is anticipated to be about unch, as the average of guesses is about 690 million bushels, down just a tid. New crop U.S. wheat production pre-report ideas average 1.894 billion bushels with a carryout for 24/25 of 782 million bushels. World ending stocks are expected to be about 257.2 million metric tonnes. If any of these figures are off significantly there are bound to be moments of pandemonium as the trade rushes to adjust to the USDA’s surprise(s). Most prudent marketers or traders hold until the post-report dust settles to make decisions, because it can be similar to trying to jump into a moving, driverless wheat truck rolling downhill.  

     Ukraine, having had to become more aggressively creative in the absence of supportive weapons and ammunition, has taken to striking at Russian assets outside of Ukraine. They have been successful at causing major damage to nearly a dozen major oil refineries and shipping facilities in the last 60 days. The resulting upward thrust in crude oil and diesel prices has caused some grumbling among end-users, but the shrugging Ukrainian attitude is predicated on the idea that lack of timely support makes this kind of effort mandatory, even if it creates greater potential for expansion of the theatre of war. For wheat this just adds another increment of global market risk of disruption of supply. Egypt’s response is apparently to extend purchases, with the latest 420 million metric tonnes scheduled for LH June, about 15 days longer than their previous normal buying.

     The trend lines in Chicago Soft Red Winter (SRW) wheat remain positive, with a new high at $6.60 in pre-dawn trading headed into Friday morning’s session on significant volume, a bit unusual heading into a report day. The next upward ratio price target for SRW is near $6.75, just 15 cents above early Friday morning activity. The funds are still holding an aggregate of short-sold positions in U.S. markets, but the European wheat markets are seeing a crossover into net longs for the first time in many months. Funds and big specs may be a fickle bunch, but they are not be to ignored. We will see new CFTC reportables on Friday afternoon, for application on Monday.

     We have seen Chicago rise $1.16 over the past 10 weeks, accelerating in the last two weeks. Have patience while the trend is in our favor. Factors: weather, war, and technical turning points. When the technicals are dominating, to be in proportion to the downward slope from the highs of the last couple of years the upward move is potentially quite large. Just remember that we can’t eat potential, so taking this one stage at a time with incremental sales at defined levels makes lots of sense.

This stuff is trackable. Let’s track it!      

Market Bullets® Friday, May 3, 2024 Close

     Chicago finished the week without injury, just a ¼-cent gain in the context of an upward move that has jumped 94 cents off of the long-term lows of the first week of March’24. KC gained almost a dime as dry weather during  tender wheat development stages has reduced production expectations in the key states of Kansas, Oklahoma and Colorado.

     War is third on the Bullet Point list. Fund short-covering is second. Weather is first. The pressure on funds to capture profits made by selling and accumulating large net sold positions earlier this year has increased enough to trigger large amount of buying back, driving prices higher. Once this type of trading is exhausted, the next phase of wheat price behavior will have to find another prime driver.  We will see the new Commitment of Traders (CoT) report figures released after the close Friday in Monday’s charts.   

     The new upward trend will soon reach a stage where it has achieved most of the short-term technical targets. At this point there will be a pause and potentially a retracement back to some ratio of the move up, i.e. 38.2% 61.8% or 78.6% (the well-known Fibonacci ratios) depending on how heavy the negative factors are. This is normal, and another upward phase should show after that. All of this “potential” hangs on when and if the market runs out of buying energy after the funds have completed their exit.

     Interest rates are sliding very slightly, although the Fed is not signaling cuts. <2-year T-Notes>.

     The Chinese have been said to be considering a devaluation of their currency to ease economic pressures. On Thursday and Friday the Yuan showed some strong price moves, the opposite of a devaluation. The Russian Ruble has also seen some stronger prices over the last week. These may be important elements of the global market stability over the next few weeks.

     Overall the wheat market is allowing some much better cash sale opportunities, but the light is still green. Patience when the trend is in our favor is the mantra. Guessing at tops is not good trading. Over the long run, as long as the trend is good, it is better to risk some of the recent gains than to jump ahead by more than an incremental amount. It would take some drama to upset the grain cart now, and we will see that in the charts when it comes.

Stay tuned. 

Market Bullets® Friday, May 3, 2024 Early AM

     Excessively wet weather is reducing Brazil’s 2nd corn crop harvest, even as it improves projected soybean production.   

     Ukraine is expecting new crop wheat exports to drop to 14 million metric tonnes versus estimated 18 million tonnes for old crop.

     Farm sales of wheat are still a significant factor, having slowed down on the protracted price declines over the last 4 months, and are which are now expected to expand through the end of the marketing year coming at the end of this month.

     Pre-dawn trading in the Chicago futures showed a strong rise, up 13 cents at 2:30 AM PDT. KC was up 17-18 cents and Minneapolis Hard Red Spring (HRS) was up 4-6 cents. The “correction” the pulled prices back was just that, a deep breath before the next push. Chicago’s early AM trade at $6.16-17 was just 6-7 cents below the highest close of last week. If allowed to keep this gain will surely attract more buying attention going into the end of the week.

     The trend is positive. Its appropriate to be patient on the sales trigger for now.

Stay tuned.

Market Bullets® Thursday, May 2, 2024 Close

     Chicago weekly wheat charts show that prices have pulled back down to 38.2 of the sharp upward thrust that began on April 19. If there is a continued pullback the next lower target is the 61.8% ratio at $5.82 (about 21 cents lower than Thursday’s day-session close).

     Diesel has printed a new low dating back 10 months to July’23. Global economic slowdown in diesel demand is affecting energy markets in spite of Ukrainian drone strikes on diesel production facilities in Russian territory.

     Natural gas had been languishing on long-term lows for months, but as contracts roll forward on the expiring May contract to June, the continuous front-month charts are accounting for the carrying charge and higher deferred contracts, a market configuration that implies excessive supply or weak demand in the nearby.

     The Chicago wheat trend remains positive in its 40-session channel.

More later. Stay tuned.

Market Bullets® Thursday, May 2, 2024 Early AM

     Typical of a “correction” pattern, as the imbalance in the market is eased, the daily trade volume over the the last four sessions has declined. Now the market will be less focused on momentum and more focused on fundamental factors like rain in Kansas or actual disruption in wheat shipments in the Middle East. The long-anticipated short-covering (buying back previously sold contracts) created a very rapid and steep upswing, followed by a pause and correction. The uptrend is intact, volatility is still high, and we are well into the spring weather market season. The price rise ultimately still depends on buyers willing to pay more for wheat.

     Geopolitical stuff is still hot, but in a slower phase for the week. Crude oil is fading back. Copper is rising fast on global demand, and interest rates have also paused in their rise. In this environment wheat may find a way to re-challenge the recent highs on demand.

     As long as the trend is in our favor, there is no reason to stress about prices, if fact unless the technical patterns shift back to a definable negative, it is ok to be patient. This is not without some demand for attention in a volatile market.

     Stay tuned, stay calm, stay with the plan.

Good hunting!

Market Bullets® Wednesday, May 1, 2024 Early AM

     The wheat displayed exhaustion on Tuesday. Chicago dropped a nickel in a relatively lazy day as volume of trade was sharply lower on Monday and Tuesday versus last week’s averages. Minneapolis Hard Red Spring (HRS) was down 2-3 cents, while KC Hard Red Winter (HRW) wheat futures took a hit of 14 cents, at least some of which came from swing-trading funds taking short-term profits from the long side(!). The net short positions still in the hands of the funds have declined, but there are still some significant sold positions that may be considered fuel for another leg up. The wheat complex has taken a corrective pattern that has achieved a 38.2% retracement and touched its 39-day-old mean line. There is respect for having reached such technical goals among the trade, so Wednesday may provide a tone-test for wheat prices. If the pattern holds steady, the intact upward bias that has been assembled over the last couple of months will be sustained. A failure to hold above $5.52 in Chicago July (50 cents below current) would attract selling attention, with advance warning from trades below $5.80 (about 23 cents below today).

     This little interruption in the beautiful and refreshing rally since April 18 could be (as the coach used to say) a “teaching film” about normal corrective trade patterns. It’s a weather market, though, also known as the “Silly Season”.

     The import buyers are clinging to their well rewarded pattern of hanging back and waiting for lower prices. It may not be the best approach in this market. Jordan made no purchase in their tender of 120,000 metric tonnes of wheat Tuesday, citing offers that were too high, an against-the-trend idea.

     This stuff is trackable. Let’s track it!

Ma1rket Bullets® Tuesday, April 30, 2024 Early AM

     There are a few major pillars of the accelerated move upward of the last couple of weeks. Some of the most noticeable are:

     The Red Sea is the pressure point for large amounts of shipping that must pass through the Suez Canal when originated from the Black Sea through the Mediterranean intended for customers in Asia. This pinch point will come into play if attacks on shipping in the Red Sea intensify, causing delays and rising costs to end users of wheat. The market is well aware of this potential for trade disruption, but conditions could shift rapidly.

     USDA’s Crop Progress report as of April 28, 2024 shows Kansas winter wheat condition at 31% Poor-to-Very Poor (PVP) versus last year same week 62%. Oklahoma PVP 14% VS 63% LY, and Colorado 23% VS 39% LY. Of these leading Hard Red Winter (HRW) states, Kansas has seen its Good-to-Excellent category slip 18 points from 49% on April 27th to 31% this week. This is one of the pillars of the swift rally that may yet be extended if this weather trend continues.    

     There is increasing pressure on China to reduce their massive investments in U.S. Treasury bonds. The effect of large liquidations of Treasuries into the global markets is to push bond prices lower, hence interest rates higher. This is not considered “emergent” but it colors the background of a market into which the U.S. government must aggressively sell bonds over the next few months and years to sustain coverage of budget deficit spending, even as a major buyer is pushing back from the table.

      Tuesday is the last trading day of April. Funds tend to be more sensitive to month-end, as their “booked trades” affect their track record and sometimes their paychecks. Covering (buying back) some of their now-eroding profitable short sales of recent weeks seems likely to continue unless one or more of the pillars of the dramatic upward move of the last 8-9 trading sessions abates. Technical retracements of such swift and significant moves are normal, so we may be able to establish some measuring points on Tuesday. The trend is upward, with a mean line around $5.97 in Chicago, only 5-6 cents below the pre-dawn trade of Tuesday morning, as the market has pulled back 30 cents from the highs of last Friday.

     The drama is not over yet. This is a good time to be watching and measuring the general tone of wheat prices. The charts are positive.

Stay tuned. Good hunting.   

Market Bullets® Monday, April 29, 2024 Early AM

     The week just ended produced the most powerful, un-interrupted, upward shot in wheat prices since the end of November and the first week of December 2023. Northern hemisphere leader was Paris milling wheat futures at the equivalent of plus-84 cents, with KC Hard Red Winter (HRW) close behind at plus-69. Minneapolis Hard Red Spring sprang up 56, while Chicago gained 55. All of this pulled the sleepy PNW soft white wheat coast bids up 35 cents.

     There was no single event or headline that produced this healthy blast. The most prominent factor is declining crop conditions in a wide variety of locations, with Kansas and Oklahoma as poster children along with several other producing areas including Russia, France and India reporting reduced expectations mostly due to dry weather conditions. Excessive moisture has been reported this season (China), but that kind of problem is generally preferred to drought. Marginally shrinking crop projections is not enough alone to support the magnitude of the price move.

     Russian military planners have been acutely aware of delays in U.S. Congress in support of Ukraine’s efforts and have turned up the heat to try to capture as much ground as they can ahead of deliveries of U.S. weapons and supplies to the front lines in Eastern Ukraine. The disruption in export loading, and anticipated logistical problems as a result suggest a slowing of Ukrainian wheat, corn and sunseed oil movement into global channels.

     The chart buy-signals were the first vigorous flashing lights we have seen in so long that it was a little unfamiliar, so inertia may have delayed some money movement. The big speculative funds did some short covering, buying back previously sold futures in relatively large orders, but they did not reduce the total shorts by enough to call that factor completed. The market has been suffering from a one-sided message so some players may have been caught off-guard. There are new technical patterns to absorb and calibrate. Now there is sure to be some pent-up cash wheat movement out of the country that will probably serve to slow the momentum of this rally. There is still quite a bit of old-crop wheat yet to be sold, at least in the U.S.

     The Chicago price is well above the Box-o-Rox 60-session moving average, which has the board reading, “delay incremental sales”.  This is a crude signal, but the general idea is to be patient with sales when the trend is in our favor. At this point, it would take a movement of the front-month contract back below $5.75, about 45 cents below pre-dawn trading this morning to shift back to, “Sell or get current on plan sales”. BoR is not intended to be a trading vehicle, so it should not be burdened as competition with the many superior “systems” that exist. It is only a simple indicator that encourages “speed-up” or “slow-down” as it fits an already constructed marketing plan.

     Please note that MarketBullets, LLC is not a trading advisor, and what we publish here is plain observation and basic reasoning. The entire responsibility for trade action by our readers must be well understood to be their own and no one else's We have never seen any “system” that is always correct and never has poor performance periods. Perhaps the “AI” will prove to be the source of a perfect trading vehicle, but it seems to us that the market takes account of such things all by itself, making that perfection fleeting and unreliable in the end. We believe that the “AI” will never catch a trout on a fly.    

This stuff is trackable. Let’s track it!

Market Bullets® Friday, April 26, 2024 Early AM

Statistics continue to accumulate showing shrinking crop estimates around the globe.

     The weekly wheat export sales report showed old crop at 82,035 metric tonnes for the week of April 18, a 4-week high. 72,200 tonnes were switched from unknown to China. New crop sales were 371,853 tonnes exceeding most pre-report trade estimates. The buyers have noticed a change in trend. 

     Thursday gave us Chicago contracts adding 7 to 8 cents to the total of 71 cents up in the last 5 sessions. MPLS spring wheat gained 10½ cents Thursday. KC HRW moved up 11 cents on new indications of drought in Kansas and Oklahoma. Friday morning had Chicago off 1-2 cents at 2:20 AM Pacific Time, KC was flat and Mpls was down 1½. Volume low heading into Friday with expectations for some profit-taking (Selling short-term gains) going into the weekend.

     There is increasing global attention on wheat prices, some from end-users and an expanding number of regular wire articles.

     The trend is upward.

Stay tuned.

Market Bullets® Thursday, April 25, 2024 Early AM

     Paris milling wheat futures gained the equivalent of $.55 per bushel on Wednesday. Prices broke out of a 32-session channel to the upside on Monday and now have accelerated toward the 61.8% retracement level after blowing the doors off of the 38% retracement of the entire downward move that started in July 2023. The impulsive nature of the move portrays a surge of capital, at least a short-covering squeeze, and possibly a move to acquire wheat deliverables in the future against stress emerging in Ukraine. Now that the replenishment of war supplies has been financed and delivery is expected post-haste, the Ukrainian troops (now an average age on the line of 43 years) have shown a burst of enthusiasm without having to parse the ammunition. The pace and heat of the battle is increasing by the hour. Monday April 22 was the largest single upward trading session in Paris since the one on the same July ‘23 date that printed that measuring high, and Wednesday provided another powerful thrust. Paris is leading the global wheat complex to the upside, although extreme price volatility is not a market-sustaining factor. Crazy price swings are a self-curing problem, as many market participants cannot manage positions due to limited risk capacity (funding). The trend has shifted violently upward.

     Chicago is up 6-9 cents just after 2:30 AM Pacific Time, KC up 4 and Mpls up 5. Corn is flat and beans are down a nickel. PNW white wheat coast bids were up to $6.10 going home Wednesday evening, up 40 cents since last Wednesday, June April 17.

     Outside of the Ukrainian renewal of war energy, the weather is not being kind to Kansas and Oklahoma, with earlier forecasts for moisture coming short. Every day of warm temperatures in the HRW regions affected will reduce production from now on. Russia also is seeing heat stress and the beginning of crop losses. India is potentially going to have to import 2-4 million metric tonnes of wheat for the first time in some years.

     The sharp upward slant on the last week of trade in the wheat complex is probably triggering some long-anticipated fund short-covering as well. We will not see the figures that would prove this theory until the next Commodity Futures Trading Commission’s Commitment of Traders (CoT) report to be released Friday after the close of trade, but the pattern is typical of such an event. The month-end book closing is hard upon us, another reason to expect some fund action given profitable positions dating back some weeks.

     Volatility is jumping, making options more expensive in general, so if you are interested in using this marketing tool, it is well to remember that costs are rising (unless you are an option seller, but this means higher implied risk as well). Call your merchant and see if cash wheat is moving in your local area. There have been pent-up sales accumulating that will hit the market now.

     This is early in the season. Now it gets more interesting and more difficult at the same time. The trend is up. Try to be patient.

Stay tuned. Good hunting!    

Market Bullets® Wednesday, April 24, 2024 Early AM 

     We have a small pause in the upward move. Chicago’s Wednesday AM small hours has July futures down a nickel, KC down 3½, and Mpls down 2-4 cents per bushel. Not a deal breaker but more like a gut-check. There is no crop disaster looming, and the market is accustomed to a certain amount of war-fog. The risk has certainly been shifting, as northern hemisphere wheat production is by no means a given at this point, with some dry spots and some possible disruptions in international shipping.

     The short-term trend base building is proceeding normally. This season is not likely to see a straight-line to high prices.

     The funds are watching closely, but have not shown any stress-buying yet. Importers are also measuring their buying plans, but have yet to extend. As always there is still potential price upside, but the present up-leg will retrace at some point, which actually is a more healthy kind of market.  

Stay tuned. At least there is something to look at.      

Market Bullets® Tuesday, April 23, 2024 Early AM 

     Monday’s main wheat trading session produced a very powerful upward shot, with Paris milling wheat in a leadership position showing an equivalent of 26 cents per bushel gain. Chicago gained 22 cents, with KC plus 19 and MPLS up 10. PNW white wheat bids moved up 20-cents to $6.00 coast. This is the strongest upward move we have seen in many moons, since at least when the Chinese came into Chicago and started buying for several weeks between the end of November and early December. That move seemed a little strange, and sure enough in later weeks they cancelled just about every bushel they bought (some 1.2 million metric tonnes). This time it has a more authentic feel, and it might be enough to trigger some exit buying trades among the big trading funds that have sold the downside so hard of late.

     Paris milling wheat futures prices have broken out of a 32-session channel to the upside and achieved a 38% retracement of the entire downward move that started in July 2023. The energy showed on Monday April 22 as the largest single upward trading session since the one on the same July ‘23 date that printed that measuring high. Often the bellwether for the Black Sea wheat market, this contract is reacting to clearly escalating war in Ukraine, and not just that the Russians are squeezing as hard as they can ahead of the arrival of a new batch of U.S. weapons and equipment, it also has to be that the Ukrainians have shown effectiveness at striking at Russian maritime targets, which could be extended to shipping. The only other factors that contribute to such a move are shrinking wheat production estimates in the northern hemisphere and fewer globally planted acres due to below-cost prices. Because the price has achieved one of the classic Fibonacci ratio levels, we see a chance that the 32-day-old upward move may require some base-building (a pullback or “correction”) that will allow buyers to set up for another round. The next few sessions will fill in some of the blanks, but the upward bias remains intact unless we see a price below €200.

     Sustaining such a decisive move is not cheap. It requires some determined buying just to work through the country selling that is sure to follow, and then to move on up will need some confirming news wires fuel the buying engines.     

     Tuesday morning pre-dawn trade showed some follow-thru, with Chicago Soft Red Winter (SRW) up 9-12 cents at 2:30-3:00 AM Pacific time. KC Hard Red Winter (HRW) night traders were working about 6-7 cents up, while Minneapolis Hard Red Spring (HRS) futures were up 7-9. This trading was happening with relative normal volume levels, so there is no scary new unknown factor looming, just an increase in market risk.

     The grain markets are jittery, with northern hemisphere production still not well defined. Once again we are seeing interesting technical patterns emerging on the charts, but the upward bias is clear, and the spring weather game is on. It is by no means certain that this pop is the beginning of anything large, but it is so refreshing that we should savor it for a moment or two before returning to the grind. Maybe celebrate it by selling a little slice of wheat. This is a really good time to be paying attention to the global markets (not just wheat).

     Stay tuned, as we will update if new stuff comes out or the pattern changes.

Market Bullets® Monday, April 22, 2024 Early AM

     Israel shot a large but relatively inexpensive missile into an airbase inside of Iran. Apparently no serious damage or casualties resulted. The series of recent, carefully calibrated “retaliation” strikes by Iran and Israel appear to be at an end for the moment, without triggering escalation, as intended. Neither Iran nor Israel spent heavily and both sides seem to have picked targets that did mimimal harm. It is difficult to see what will be promoted in the conflict next. As for the effect on wheat prices, it is a secondary background item, but it is serving as a minor risk-on factor requiring close observation.

     Russia continues to grind away on Ukrainian infrastructure, electrical grid and export facilities. The Ukrianian military situation seems to be  

     On Saturday the House of Representatives passed a bill providing $60.84 billion in aid to Ukraine that may get through the Senate by mid-week. $9.1 Billion of the total $95 Billion package is intended for humanitarian support to Palestinian civilians. ISW: US Senate Intelligence Committee Chairperson Senator Mark Warner reported on April 21 that US provisions of military aid to Ukraine, including long-range ATACMS missiles, will be in transit to Ukraine “by the end of the week” if the Senate passes the supplemental appropriations bill on April 23 and US President Joe Biden signs it by April 24. The market has become jaded about these developments, showing not much more than a slight elevation of overall market risk noise.

     So far weather has not brought the moisture amounts hoped for in Kansas and Oklahoma, but there is still an extended forecast bearing rain ahead.

     Monday early AM wheat markets are mixed to slightly positive, with Chicago up about 6, KC plus 4 and MPLS unch. Chicago July has once again reverted to the mean of its 32-session upward trend channel. The upside challenge remains the old April 8 high at $5.88/89. The low end tripwire selling price is at $5.50 with a secondary low from march 8 at $5.37. Its still a range-bound deal with a slight upward tilt.

     There seems to be enough stress to keep the market honest. The trend is neutral.  There is little pressure to do much but wait for a confirmation either way for the moment. The big picture is a pending harvest with reasonably good growing conditions, and continuing aggressive sales by Russia in the light of a firm U.S. Dollar. We are looking at a complex environment for wheat marketing ahead.

This stuff is trackable. Let’s Track it!

Market Bullets® Friday, April 19, 2024 Weekly Close

     The wheat complex worked hard and accomplished very little for the week. Chicago led the way, thanks to a last-day rally able to finish with a plus 10¾ cent in the front month contract. Minneapolis Hard Red Spring (HRS) was positive 4¾ cents, while Kansas City Hard Red Winter (HRW) lagged the group with a minus 3½, likely the victim of good forecasts for rain in Kansas and Oklahoma.

     Chicago repudiated Wednesday’s July contract 12½-cent downward spike (in which KC and MPLS did not fully participate). The short-term upward channel in Chicago is intact following that challenge of its lower boundary, but the big picture is still one of price weakness.

     The CFTC Commitment of Traders (CoT) reports as of the end of last week showed a continued expansion of trading fund net short-sold positions. It will take some kind of stimulus to push the big speculative entities into covering those sold positions  

     The net trend for the wheat complex remains flat to mildly positive, but very near multi-year lows already established. Improvement in wheat crop conditions in the northern hemisphere could prevent meaningful upside price breakouts, and potentially new lows could be printed on a failure to hold above the bottom end of the recent sideways run. Until this setup is shifted, it is clearly best to stay on plan and make incremental wheat sales on schedule. The expenses and risks of sitting on wheat in the bin are not justified in this market environment. Call your merchant for strategies.

Stay tuned

Market Bullets® Friday, April 19, 2024 Early AM

     Early AM trade in Chicago showed a 22-cent upside pop to $5.74¾  starting at about 6:00 PM and ending at about 10:00 PM Pacific Time, when a fade back to the middle of that range began. This kind of quick rally in the middle of the night is not unheard of, but is uncommon. The volume of trading did increase, but not massively. The night trade is usually very low volume, so illiquidity allows sudden price moves stimulated by larger than normal orders. Once the order had been fulfilled, the market went back to more normal behavior. It is encouraging to see positive numbers even if there is no explanation for the activity. The same pattern showed up in KC wheat and to a lesser extent in Minneapolis.  

     The weekly wheat export sales report revealed a net reduction with net cancellations of 93,556  metric tonnes, 123,700 tonnes cancelled by China and 48,000 for unknown destinations.

     Rain in  Argentina is slowing corn and soybean harvest. Rain in France and Germany is slowing spring planting.

     Overall global grain production estimates for the year continue to very slowly decline.The International Grains Council adjusted their forecast by 3 million metric tonnes (a little over 1/10 of one percent).  

     Wheat complex accomplished very little in Thursday’s session. Friday’s early excitement may allow some follow-thru in the day session. The price remains within the 31-session upward-sloped channel.

This stuff is trackable. Let’s track it!  

Market Bullets® Thursday, April 18, 2024 Early AM

     Pre-dawn trading on Thursday shows Chicago up 3 cents to a nickel. KC also up 3 Minneapolis leading again, up 6½. All of the charts are holding inside of a 10-week, 50-cent range. Its just a waiting period, as the wheat market is balanced around fair value. Most wheat producers are seeing local prices very near break-even, slowing origination movement out of the country and in some cases leading to decisions to switch assets to other crops.     

     Weather in Russia is causing doubts about previous optimistic production estimates. Its still early.

     There is rain in the forecast for most of the U.S. wheat ground over the next 10-day to 3-weeks.

     The charts have been flat long enough to call it a “base”, so the next move will have a measuring mark. The downside price potential still exists, but it is far smaller than it was at the first of the calendar year (-$2.30 in Chicago, -$3.06 KC, -$3.01 MPLS, -$.95 PNW White. The previous chart patterns that projected to the downside have been nominally fulfilled, leaving little to be achieved. This does not proclaim that there is a large rally imminent, it only suggests that the risk on sitting on expensively stored wheat is smaller. The cost of storing wheat in the bin is rising as inflation and interest rates continue to eat wheat-dollar value. Ask your merchant how to soften the sting of storage costs.

     Interest rates are still rising, as inflation continues.

     At some point, the money that has driven gold to new all-time highs will be looking for new values. Grains at or near historical lows become attractive in that light. The shift in that direction will be detected early via the charts.

Stay tuned.    

Market Bullets® Wednesday, April 17, 2024 Early AM

     Wheat planted acreages in some major production regions of the world are shrinking. For example, French soft wheat planted areas are expected to be down about 7.7% this year. This is at least partly driven by lower global prices, as the market does exactly what it is supposed to do; The invisible hand of the market plants, and having planted, moves on…

   Egypt is working their wheat import receiving schedule at about 6 weeks out, a moderately tight time frame. When large buyers perceive potential rising prices or difficulty in securing supplies they tend to extend the shipping schedule frontier. Most of the global buyers have been relaxed for many months, having been rewarded repeatedly for delaying purchases. This will change at some point, but the drivers for that change are not yet visible. This amounts to stored buying energy that will become a powerful price-positive factor, something like a large, accumulated net short-sold position in the hands of a speculative entity.

     Adding to Tuesday’s crop condition comment: Kansas Hard Red Winter wheat condition is already deteriorating due to dry conditions. The Good-to-Excellent rating dropped 6 points week-over-week.

     The wheat market has shown resilience, or at least some buoyancy in the last month, mostly based on anticipated normal spring weather vagaries and the occasional war. Every day that passes without the emergence of any serious regional production problems, or global problems with food is a day closer to harvest in the northern hemisphere and easy wheat purchasing for big importers. It is vital to work a good incremental sales plan in this environment, as there is no guarantee of large price increases in the foreseeable future, and there is some mildly increased potential for downside.

This stuff is trackable. Let’s track it!   

Market Bullets® Tuesday, April 16, 2024 Early AM

     Very early trade Tuesday showed Chicago and KC wheat flat to very slightly negative, even as Minneapolis spring wheat futures were 7-8 cents higher. The closing settlement in Paris milling wheat was also about unchanged.

     The bellwether Chicago market is challenging the low end of its 27-session upward channel (again). This is the 5th attempt to penetrate the rising low-side channel line since the first week of March. A lack of conviction is evident as the price is “tippy-toeing” along that line.

     U.S. national winter wheat crop condition reports show unchanged to down 1% in the Good-to-Excellent rating categories. Kansas, at 43% GeX will need some moisture soon or declines will begin to show. Washington and Idaho spring wheat seeding both show ahead of normal pace. Idaho is 39% done versus 28% and Washington is 42% versus 40% in the ground.     

     The weekly export loading inspections for wheat are now at 15.921 million metric tonnes, 9.2% below the same time last year compared to a 16% lag showing only a few weeks back. Sales have been at or above last year’s totals for weeks, so shipments have been expected to catch up.

     The U.S. Dollar Index is rising. War in the Middle East seems likely to continue to ramp slowly higher. Although this is an indirect influence on wheat prices it may provide some motivation for wheat to rally, as global markets do not respond well to uncertainty as a general factor, but most autocratic governments understand that large numbers of hungry citizens are dangerous to the incumbent regime, making wheat consumption inelastic compared to consumer goods. If there is any downside potential it seems unlikely to be large, as the current price of wheat is near or below the cost of production in significant areas of the world.  

     The price trend of wheat has pulled back 20 cents from recent highs. This kind of channel range-based pattern, both upward and downward for several weeks each way is likely to become familiar in the current environment. It is a reflection of a market unable to find a mandate. Until there is an injection of new fundamental bias, an ongoing incremental marketing sales campaign based on capturing range movements seems likely to be a good fit for this year. It does test one’s patience.

This stuff is trackable. Let’s track it!   

Market Bullets® Monday, April 15, 2024 Early AM

Tax Day!

     Since peaking in 1981, U.S. wheat planted area has declined by nearly 39 million acres and production has decreased by nearly 1 billion bushels. The U.S. is ranked #3 in terms of global wheat exports, after Russia #1 and Australia #2. In keeping with totals of recent years, Russia and Ukraine together would account for almost 47 million metric tonnes, or about 29% of total global wheat exports among the top 10 exporting nations. Post-war will lead to even greater totals, but that prospect is quite a way down the road at the moment. The  

     In the pre-dawn hours of Monday April 15, the Chicago Soft Red Winter (SRW) wheat market was off about 7 cents. KC Hard Red Winter (HRW) wheat futures were down 6 and Minneapolis Hard Red Spring (HRS) wheat was trading down 2½ to 3½ from Friday’s closing settlement.

     The trend channel that has contained wheat prices in Chicago remains intact but is about to be challenged on the downward side on any confirmed break below $5.37-$5.38 in May futures (Most May futures positions will begin to be rolled over into July in the next week or so and will be completed in the last half of April). July is true “new crop” for SRW and HRW, while September delivery fits the HRS market harvest schedule better. PNW white wheat also is mostly a September New Crop harvest, but lacks a specific futures contract to match, most often using Chicago SRW as a proxy for risk management.

     In the absence of significant fundamental changes, the Charts are the leading attraction. Whatever is to come will show up there first.

Stay tuned to this channel.    

Market Bullets® Thursday, April 11, 2024 Early AM

     Wheat was trading a couple of cents either side of unch as of 2:15 AM Thursday morning. USDA will release the monthly World Ag Supply/Demand Estimates (WASDE) Thursday at 9:00 AM Pacific, 11:00 Central. Trade estimates are posted in Wednesday’s update below.

     Interest rates are rising with 2-Year Treasury Notes at their highest yield since last November’23.

     More perspective from MarketBullets after USDA has released data and the trade has had time to digest it a bit.

     The wheat trends in Chicago Soft Red Winter (SRW) and KC Hard Red Winter are still upward (or at least sideways in Minneapolis Hard Red Spring (HRS). If the report does not generate any sparks large enough to ignite the fund short-covering fuse, we will just go back to tracking the herd across the valley.

Stay tuned.

Market Bullets® Wednesday, April 10, 2024 Early AM

Scraping the barrel:

     Rain in 10-15 day forecasts for U.S. Hard Red Winter (HRW) wheat areas, but Colorado and western Kansas are still in the “below normal” category.

     Thursday morning 9:00 AM Pacific Time, 11:00 AM Central will see the monthly World Ag Supply/Demand Estimates reports: The trade pundits are anticipating another increase after the increased March 31 stocks totals. The average guess is 690 million bushels, 17 million over the March report in a range of 670-723 million bushels. World stocks are expected to show a very small 0.4 million metric tonne increase with an average pre-report guess of 259.2 million tonnes. Usually the trading immediately following the data release is a bit “bouncy”, but if there is a surprise that exceeds trade expectations there can be fireworks. This particular report period does not usually trigger excitement, but it is prudent to wait until post-report to place trades.   

     MOSCOW, April 9 (Reuters) - Russia has seized companies belonging to agricultural firm AgroTerra and placed them under temporary management, including some backed by Dutch investment firms, a decree signed by President Vladimir Putin showed late on Monday. See article <here>.

     The FSA Attaché in China estimates that Chinese wheat production in 2024/2025 will be 1% higher than last year at 138 million metric tonnes. This is likely part of the reason for the cancellations of the more-than-a-million tonne purchases of U.S.-origin Soft Red Winter (SRW) wheat in November and December, as China had been projecting crop losses early on.

     Russian phyto-sanitary shipping delays of export wheat will likely be cured soon, although there is a certain fog around what the issues really were. It is true that wheat importers have become increasingly sensitive to quality. This is not much of a market price driver, but it could help shift some sales away from Russian sourcing for a short while.

     The price charts for wheat as of very early AM Wednesday are showing a reversal gain of most of Tuesday’s 8-cent sag in Chicago (minus 8 ½ in KC, plus 3 in Mpls). Volume is light. The price is trading within a few cents of either side of the 22-session mean line, an upward slope.

     The trend is upward if you squint at it a little. Still below the 60-day “BoR” average (see recent previous updates for definition).

Stay awake…tuned. Eventually it will get more interesting.

Market Bullets® Tuesday, April 9, 2024 Early AM

     Tek Tok – Last Friday and again Monday morning, Chicago front-month futures accomplished several inflection points on the daily chart. The price stretched out and tapped the 60-day moving average, as well as the outside limit of the 84-session descending channel, and on top of that achieved a 38.2% retracement of the entire move downward from early Dec’23 highs…and by very early AM Tuesday had backed down and away as if the zone was too hot. All the extremely short-term down-moves that have become the rhythm of the last month’s trade have the same kind of pattern; reaching up to a key point at which a breakout seems imminent, then retreating, each time down just enough to establish a slightly higher high than the previous beat. It’s actual trend behavior, but it still seems to be just the first beachhead of a much larger upward move. All this eye-straining text is to suggest that this is just the beginning of a long season of similar behavior. For sellers, it burdens even the best marketing plans, but it is better than watching the price bleed off yet another 50 cents every couple of weeks.

     The current pattern is still the range high point of “decision dithering”, as we ponder if the run-up, now 22 sessions old, is completed, now also including the validation of the 38.3% ratio retracement (which potentially resets the Fibonacci meter back to zero). The decision to sell an incremental piece of wheat here can be defended. It makes sense. The only enemy is FOMO (Fear of Missing Out) on the event of a real upward breakout move. The comfort here is that experience says that the “Big Breakout” is statistically relatively rare, requiring a new factor or surprise to the market. The downside has expanded a bit (about 35 cents).

     Anticipating the end of any defined trend, even a short-term one, runs against the wisdom that we follow; “Stay on the trend and be patient until the trend fails.” To that end, there is a little tripwire sell point between $5.38 to $5.40 in Chicago May contracts. That doesn’t amount to much, but it is clearly visible. Even white wheat merchandisers will likely take notice of a fail at that point.

     The fundamentals are not changing much. Weather is reasonable in the northern hemisphere for growing wheat, quite a bit better than the last couple of years.  Russia will have another big crop, even if smaller than the last. U.S. national wheat condition is rated at 56% Good-to-Excellent (GeX) as of the week ending April 7. The rating is unchanged from last week, but there is a small twist: “Good” dropped to 48% from 49% last week, but the point was added to “Excellent”. Last year the overall rating was 27%. The U.S. Dollar Index has not reached outside of its 16-month trading range and is very near the center of that range at present. U.S. export inspections will have to hustle to make the estimated annual total, with an approximate 16% lag to last year’s total. No large global region of wheat production is displaying extreme duress now.

     The trend is positive at the top end of its recent upward-tilted range and is testing some heavy technical stress points. The fundamentals are boring at best and running toward negative at worst. Stay on plan and make the incremental sales on schedule. Watch the charts for indications of changes in market winds.

Stay tuned.  

Market Bullets® Monday, April 8, 2024 Early AM

     The geometric mean of the last 21 days in Chicago wheat prices is about $5.61. As of about 2:30 AM Pacific Time Monday morning, the May contract was trading at $5.63. That about sums up the trading tone and trend for wheat in the last 30 calendar days. It’s an upward channel, but with barely enough energy to keep going. All this last month has been in the context of an 83-day downward statistical channel that started in the first week of December 2023, some 86 cents higher than current trade. The low on March 11 reached back to August of 2020 for a match. This is historically significant, even if it feels like a nap. Even though the road ahead looks bleak, this is no time to be asleep at the wheel!

     The trend is upward and is once again reaching the top side of a trading range that has seen five different attempts to break into an accelerated upward curve and has turned back down every time so far. So the thing is up, mostly on the usual spring production questions, but also due to war in Ukraine and Israel. Ranges are frustrating critturs. At the top, there is this moment of truth, where there is either a spring into new price territory or a collapse back to the base. At least there are boundaries that can function as tripwires. Meanwhile, it does seem like this will be the “Year of the Range”, so buckle-up. It’s likely to be a challenging marketing season.

     Chicago also just kissed the 60-day moving average (equivalent of about 90 calendar days). This is an arbitrary selection of each days average of the last 60 trading sessions prices which we have chosen  for the “Box-o-Rox” signal generator. Its just a very crude, simple, easy way to market wheat, with a 1/12 (8.3%) of total wheat to be sold for each year on deck each calendar month. If the BoR 60-day is above the current price daily settlement, then that allocation is sold immediately and no more will be sold until the next month’s 8.33% comes up for action. If the BoR is below the current close, then the sale is delayed until such time as the BoR moves back above the currently trading price. As long as the BoR is below the current price, no sales will be executed until the BoR moves back above, at which time all of the accumulated monthly allocations will be sold. That’s it! There ain’t no more.

     The intention is NOT to create a magical trading system that is always right so you can retire wealthy. It is to create a benchmark that you should be able to easily and consistently beat, or at least to grade your annual marketing efforts by…a yardstick that will lean toward making sales slow and patient when the trend is up and to trigger quicker sales when the trend is not your friend, when the natural tendency is to “hold on until it comes back” (the natural enemy of marketers everywhere). The truth is that human beings are hardwired to cling to losing positions more and more the worse it gets, and to quickly cut off winning positions long before they mature. Box-o-Rox (as in “as dumb as”) is a thing that encourages clear thinking about the trend. Just like MarketBullets!

This stuff is trackable. Let’s track it!     

Market Bullets® Friday, April 5, 2024 Early AM

     The wheat complex has accomplished one thing so far this holiday-shortened week heading into Friday’s session: It has held onto enough gains to prevent a technical failure and Chicago has managed to cling onto the 20-session upward mean line in spite of inventory and quarterly stocks and planting numbers that were slightly net negative for wheat overall.

     Corn and bean futures have both recovered from their respective downward slope move that ended in the last week of February; corn now 28 cents over that low and beans 36 above, but this week to date was not helpful in that effort. Momentum is low in the row crop arena.

     The U.S. Dollar Index is flat at about 104, about in the middle of what has become a range-bound affair since the last week of December. Both the Chinese Yuan and Russian Ruble (same site page) have not been distracting their respective leaders from other, more pressing needs. Trade between the two has flourished in the last couple of years. Russia is not having much trouble selling either wheat or oil in spite of any sanction annoyances. The world has reached a kind of stasis, even with the winds of war blowing in Israel and the Middle East neighborhood.

     With that background, wheat is still showing some respect for spring crop worries. The  funds seem watchful as they guard their big net short-sold positions. More stasis.

     “Quiet but alert” is the market tone, and it should also be ours. When this market decides to move, we will see it. Meanwhile, let’s enjoy what is shaping toward a powerful spring season for most wheat producers.

Let’s track it! Stay tuned.  

Market Bullets® Thursday, April 4, 2024 Early AM

     The trend for the war in Israel and neighboring countries is rising. There has been a steady increase in the language from Iran that indicates more aggressive activity. When Israel hit the compound in Damascus that killed at least 3 senior members of Iran’s Revolutionary Guard, in addition to several other Iranian military personnel, it accelerated the saber rattling.

     ISW April 3, 2024: “Several Iranian-backed Iraqi militias have signaled their desire to disrupt the “land bridge” connecting Israel to the Persian Gulf. Harakat Hezbollah al Nujaba Secretary General Akram al Kaabi criticized the “land bridge,” which passes through the United Arab Emirates, Saudi Arabia, and Jordan, in a speech on April 3. Kataib Hezbollah military spokesperson Hussein Moanes similarly declared on April 1 that the group is prepared to arm Iranian-backed militants in Jordan and “cut off” land routes that reach Israel.”      The above items do not have a direct effect on wheat prices (yet). The effect on crude oil and derivatives prices has been positive, but muted. Some of the most sensitive “choke points” in global shipments of oil remain functional, but the market is showing some rising anxiety in the form of higher crude oil prices.

     Global wheat export business continues without much reaction to any wire news items. Egypt just bought a slug of wheat from several optional origins (non from the U.S. or Canada – no surprise).

     At 3:30 AM Pacific Time, Chicago wheat lead contracts were trading right on top of the 19-session geometric mean, just a few cents or less above Wednesday’s closing settlement and still in an upward-biased channel. KC Hard Red Winter wheat futures lead month contracts were also very slightly positive early Thursday, up 2 at $5.83¾. Minneapolis Hard Red Spring (HRS) was up about 7 cents, repudiating a recent break below known chart support.

      Overall the wheat market is holding onto a positive slope, now 19 sessions old. Wednesday’s session was positive, and early Thursday trade seems to be holding onto those gains by its teeth.  

     If Chicago can break above $5.74 it seems likely that some additional buying energy will be encountered. The trend is a bit tenuous, but positive. The top of the recent range remains a decent spot for some incremental cash sales, with the possibility of more gains to come. A failure of the low side between $5.38 - $5.40 would be a tripwire warning on the downside.

     Gold prices achieved another record high during Wednesday’s session, a reflection of rising global economic anxiety and a sensitivity to inflation indicators that seem to be intractable. Extremes in some of the “outlying” markets in the background of global wheat trade may be harbingers of change ahead.         

Stay tuned.  

Market Bullets® Wednesday, April 3, 2024 Early AM

     Wednesday’s wheat market did nothing new by returning to the low end of the now-18-session upward channel. Only a couple of days ago it was threatening the top of the channel. For the 4th time in those 18 trading days the threat is to the low side.

     There is a little warning tone sounding among the U.S. wheat futures markets. Minneapolis Hard Red Spring (HRS) has failed downward through its 7-week old, flat-bottom pattern. Chicago and KC have both been able to prevent their similar patterns from breaking. All by itself, this sell signal in Minneapolis is not much, but historically it is just such a little pebble that may start something bigger.

     There is little buying incentive for end-users of wheat. There is plenty available at the present price levels. Outside of normal book adjustments (many funds are paid based on realized profits based on  month and quarter ends), the big trading funds are not feeling much pressure to cover their short-sold positions, and in the last week or two have increased net shorts. Those same funds tend to be technically driven, and the chart patterns that would portray upward bias have not emerged.

     The downward bias is not extreme, as the price for wheat has reached levels that slow cash wheat movement to idle speeds in many producing regions.

     All of this adds up to a test of patience for marketers of wheat. Marketing plans that feature incremental sales year ‘round have a prominent advantage in long-term negative or flat markets. Stay on plan. Make the sales on time. There are real strategies that allow flexibility. Call your merchant.

     Its like fishing for catfish…keep the bait in the water, try not to fall asleep. Watch that line.  

Market Bullets® Tuesday, April 2, 2024 Early AM

     From ISW April 1, 2024: on Israel killed one of Iran’s senior-most military commanders in Syria in an airstrike on April 1. Israel struck a building directly adjacent to the Iranian embassy in Damascus, killing Brig. Gen. Mohammad Reza Zahedi and some of his top subordinates. The Iranian regime has vowed publicly to avenge Zahedi and is creating a domestic expectation that it will take some dramatic action. This is not a direct wheat price factor, but expansion of war is always a market concern.

     USDA’s first Weekly Crop Progress Report for this crop year revealed the 18-state wheat crop condition at 56% good-to-excellent (GEx) versus last year’s 28% at the March 31 mark.

Washington’s winter wheat condition showed 51% GEx, Oregon 71% and Idaho 66%.

Kansas City HRW: Texas 44% GEx, Oklahoma 73% and Kansas 48%.

Chicago SRW: Illinois 64% GEx, Missouri 77% and Ohio 67%.

So far so good, with no serious laggards.  

     France is seeing their wheat crop rating at 66% GEx.

     U.S. wheat export inspections are lagging about 12% behind last year’s pace, an improvement from last month’s 15%. Export sales are slightly ahead of last year. Shipments are expected to catch up by the end of the crop year on May 31.

     India, whose wheat production suffered last year from drought, is expected to see a dramatically  better crop this season at 112.5 million metric tonnes, an all-time high.

     Russian wheat exports are not likely to slow down from their already feverish pace, with a good crop projected there.

     Reportable positions by large speculative funds in wheat continue to show heavy net short-sold positions, eventually a source of buying energy if fundamental conditions shift.

     For the last 17 trading sessions the Chicago Soft Red Winter (SRW) wheat price charts show an intact upward trend channel, but this pattern still remains within the boundaries of the long-term downward trend. The upside target range for SRW is between $5.71 and $6.01, about 16-46 cents above early morning trade levels on Tuesday, April 2. Last week’s high at $5.68½ is the tripwire alarm for a breakout attempt. The Box-o-Rox 60-day moving average is still above the alarm point, calculating at $575.

     Range tops like the one we are at now are always a conundrum. The market tends to honor the boundaries of tested ranges, so selling these prices becomes attractive, but there is always a chance for a gain if there are enough buyers discovered to lift above the range edge. This is where the beauty of an incremental sale really shines. Given the roster of mild market negatives listed above along with the overall downward trend, a range-top sale is reasonable. Once the price is able to prove a new upward bias, then the next sale gains potential to raise the average. It is time to be watching a little more closely.

     Stay tuned. Watch Iran’s next few moves.   

Market Bullets® Monday, April 1, 2024 Early AM

     Chicago Soft Red Winter wheat futures at 3:30 AM Pacific time were trading less than one cent below the statistical mean of the last 16 sessions and well within the range of trade from last Thursday. Last week’s USDA reports were not a big positive for wheat, although the 16-session trend remains positive. Wheat fundamentals are not pushing the market to ration supply. If no new factors to emerge in the next 6-8 weeks it seems unlikely that wheat prices will reach above $5.86 in Chicago front month futures, about 30-35 cents above present trade. A failure to hold above $5.38 would attract selling interests.

     Fertilizer prices have been increasing, a seasonally normal pattern. The broken bridge at the Baltimore port entry is expected to reduce supply of Urea to eastern seaboard producers.

     Inflation continues to frustrate U.S. consumers, and interest rates are not likely to decline for some time, even if the Fed begins to cut as expected over the next several months. Gold is reaching new all-time highs on Monday’s early trade, even as natural gas is pushing long-term lows and diesel is reaching lows dating back to last Dec’23/Jan’24. Wheat is facing continued aggressive pricing by Russia and Ukraine, whether they are working together or not.

     This year is going to demand more deliberate and thoughtful marketing than the last couple of years. Stay on plan.

This stuff is trackable. Let’s track it!

MarketBullets® Thursday, March 28, 2024 Weekly Close (No markets on Good Friday)

USDA All-Wheat Stocks in All Positions: 1.087 billion bushels. High end of pre-report guesses: 1.080. Price-Negative.

USDA All-Wheat Planting Intentions:  47.498 million acres. Average pre-report guess: 47.330. Mild Price-Negative.

USDA Winter wheat Intentions: 34.13 million acres. Average guess: 34.87. Mild Price-Positive.

USDA Spring wheat Intentions:  11.335 million acres. High end of pre-report survey guesses: 11.32. Mild Price Negative.

USDA Corn Planting Intentions were on the very low end of pre-report ideas, market was +15½ cents. Bean Planted Acres Intentions were right on the average guess, market closed down ½-cent.

     Chicago wheat futures gained 12¾ cents. KC up 8¼. Minneapolis down 6½. The reports were net slightly price negative, but there was still a “relief rally” as things were not as negative as they might have been.

     The short-term technicals remain the most positive for wheat in many months, with Thursday’s Chicago wheat re-confirming the now-ragged and uncertain 1-2-3 reversal bottom with both the highest close and the highest high since march 4th, 18 trading sessions back. Our Box-o-Rox 60-session moving average calculates at $5.77 Chicago versus Thursday’s close at $5.60, so the simplistic and boring marketing benchmark continues to display “sell on plan without delay”. This is just telling us that the big-picture trend is still negative. It is way too easy to ignore the markets when they show conflicting patterns, but there are decent opportunities to capture incremental gains here, and the longer-term does not have much fundamentally going for it. Thursday’s wheat rally (except for Minneapolis Hard Red Spring) could be at least partly blamed on corn’s lower planting intentions, although this makes a weak spot in the chain. Both Corn and Bean acres can still shift rapidly depending on price and weather.

     So we head into a 3-day weekend without a real mandate for Monday. Wheat is trying to create a breakout, but is relying on short-covering for an excuse, which is like running an engine on starter fluid.

     If you are tired of looking at wheat, have a look at Cocoa…sheesh! Better put some cans of powder away.

     Part of what is wrong with cocoa is wildcat gold miners destroying farms. Gold is also at all-time highs.

Stay Tuned

MarketBullets® Wednesday, March 27, 2024 Early AM

Diesel has returned near its long-term lows last traded in January. Curiously, most of the market chatter has been supporting the idea of higher prices, but the charts show only weaker lines. It is always interesting when a market comes to a long-term low, which temps buyers in, only to punish them with new lows. Is the diesel market about to turn positive after a 24-month downward move from $4.67 per gallon to $2.58? (based on 42,000-gallon contracts in New York Harbor locations, not including taxes, transportation to other points, or other costs). The trendline is still negative with no buy signal pattern. It’s getting to the point where it makes some sense to fill the tanks (including heating oil tanks for next winter).

The U.S. Dollar Index is slightly stronger, while the Ruble is slightly weaker, as is the Chinese Yuan. The currency markets are not telegraphing global economic distress, part of an environment in which big spec funds are hunting for movement and finding slim pickings. Once a move begins under such conditions, the money will move rapidly. Anything trading near long-term lows, i.e. wheat, is being watched.   

Russian wheat exports are under scrutiny and apparently have been getting enough complaints from buyers about quality to disturb Russian government officials. This kind of problem is temporary, but augurs mildly in favor of U.S. wheat values. The response to the issue has so far been threats to “re-distribute export quotas” among the big oligarch-owned export companies. The boss is unhappy.

European Union wheat exports are lagging last year’s year-to-date total by about 2%. There is little drama in the global wheat trade at present.  

The wheat market trend is lower but without momentum. Without significant new fundamental factors, new lows from here seem remote. This should not be taken as a buy signal. Some large speculative traders have their buying shoes on, but they are still on the sidelines.

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday, March 26, 2024 Early AM

     Chicago faded out of the confirmation of the 1-2-3 pattern. At  this point, it is becoming doubtful that the pattern will survive. This week will become increasingly pre-occupied with the USDA reports due Thursday morning. The nascent 13-day-old trendline is still intact, having moved up 30 cents from the March 11 lows. There just is not much conviction showing.

     Weekly U.S. wheat export shipments for the week just ended were reported at 315,395 metric tonnes, down from 294,500 last week. Total shipments for the marketing year-to-date are 2.5 million tonnes behind last year’s pace, although sales continue to run about 5% ahead of the prior year.

     The trade is pondering recent pre-USDA report surveys showing anticipated average guesses for March 1 all-wheat stocks to be 1.05 billion bushels, with a range of 1.0 billion to 1.08. Wheat planted acreage is estimated at 47.3 million acres vs 49.6 million last year. The average spring wheat acreage guess is about 10.9 million acres. Most of the observational pressure will be on corn and beans. The reports will be released on Thursday morning at 9:00 AM Pacific and 11:00 Central.

     The potential downside of the global price of wheat has been seriously reduced over the last couple of months. The results from low prices are slow to emerge, but they include farmers re-considering how much acreage to commit to wheat as its profitability has declined versus some alternate crops. This is natural and is exactly what is supposed to happen. The re-deployment of farm assets does not happen quickly, and some regions have limited alternatives, but slowing farm sales of existing supplies, along with smaller projected crops in the future will eventually cause prices to rise.

     All of that said, the present market tone and behavior portray low energy in either direction. The big trend is still lower, but the little trend is trying to sprout a new upward bias for the first time in many months. This infant trend is going to run into harvest soon. so we will be paying extra attention to downward tripwire-style alarms.

     Maybe we will see some fireworks on Thursday…

This stuff is trackable. Let’s track it!     

MarketBullets® Monday, March 25, 2024 Early AM

      After midnight Sunday, heading into Monday’s trade, Chicago was confirming the 1-2-3 reversal pattern that took so much time and energy over the last week. May contracts, the “front month” in many charts, was up 8 cents, at $5.64, exceeding the required target of $5.56 handily. This is refreshing to see, but to be orthodox about it, we must have a close over that target and not just a intra-day spike.

     Kansas City Hard Red Winter (HRW) is lagging 8-10 cents under its $6.05 target to confirm the same pattern reversal with which Chicago is flirting. Minneapolis Hard Red Spring (HRS) futures are also about 12 cents under the tripwire.

     All of the major wheat futures markets have displayed a more positive behavior pattern over the last 12 sessions, with Chicago and now Paris leading the way.   

     Paris Milling Wheat futures on Friday showed a very vigorous upward shot, gaining €7.50 per metric tonne (about $.22 per bushel), easily achieving a 38% retracement, filling an old chart gap from mid-February and printing its best price since February 13 of 2023, probably driven by war escalation beyond the borders of Ukraine, including damage to Russian Navy property. This extension of war beyond the boundaries of the game to date along with the ISIS terror attack in Moscow, has clear potential to disrupt the orderly flow of wheat out of Ukraine and portend a new and creative chapter in the war. This leadership by Paris could provide the spark that lights up a short covering run by the big funds that have profits in large short-sold positions in the U.S. markets.

     This week is a nervous week for the trade anyway, with the Stocks-in All Positions and Planting Intentions reports coming out on Thursday the 28th at 9:00 AM Pacific and 11:00 AM Central.

     Like any short-covering run in the past, the character of such a move is usually very fast, sharply higher and very short-lived, a difficult pattern to capture, but one that can change the overall  tone of the larger market, stimulating end-user buying.  Such a move also ignites farmer selling, which had been lagging lately and may overwhelm the buyers at some point. Certainly it is not boring.

     This is a good week to observe the tone and character of the wheat markets. It may be the beginning of a period of volatility that could make options more expensive (richer for sellers and nerve wracking for buyers).

     The trend is newly positive, still vulnerable, but showing signs of strength. Patience and attention.

     Stay tuned for more. It may be entertaining and useful.

MarketBullets® Friday, March 22, 2024 Weekly Close
     The only grain that closed the week with a net negative was soybeans at minus 6½ cents. Chicago Soft Red Winter (SRW) wheat led the pack with +26¼ cents (revised on settlement) per bushel for the week. This would have seemed unlikely at the beginning of last week, with all the sales cancellations from China and fairly good crop condition reports for U.S. production, but the realities of impending spring weather and a long-anticipated short covering effort by the large trading funds provided enough support to prevent a failure.

     Chicago’s 1-2-3 reversal chart pattern was confirmed, by ¼-cent! This is not a loud “gong” or an inspiration to technically driven buyers! It leaves some confusion. “Is it is, or is it ain’t?” Still, it is confirmation of a familiar, old-fashioned pattern. The only answer will begin to emerge on Sunday evening, March 24th, heading into a week probably filled with discussions of what the USDA Quarterly Stocks-in-All Positions and Planting Intentions reports will reveal on Thursday morning, March 28 at 9:00 AM Pacific Time, 11:00 Central. It may be a bit too much to expect some powerful price rally based on a market that barely made it across the threshold of confirmation.

     The trendline is more positive than it has been for many weeks, but that is a low bar. The first target of this raggedy move up is the 38% retracement of the entire move downward from the high price point in the first week of December (just as China had completed its 1.1 million metric tonne series of SRW purchases). That target is about $5.71 (just 16 cents above the close of this week). It is a challenge to work up much enthusiasm for such a paltry run. Maybe USDA will provide some help on Thursday.

     If there is any short-term factor with potential buying energy worth watching, it is the large trading firms CFTC aggregate net short-sold positions in wheat. Chicago SRW is looking at 80,000-plus net shorts, KC Hard Red Winter (HRW) futures are reported to contain net short 37.8k, and Minneapolis Hard Red Spring (HRS) is short 22.7K. These totals are mostly in proportion to the relative sizes of their markets. The figures represent contracts that must eventually be bought back (Covered). It’s a pool of captive buyers that sometimes attempt to leave the building all at once…a “short squeeze”. It only takes a strong spark of news, i.e. a government announcement or report, or war, or equivalent. This is not an easy thing to anticipate, but there it is.

     Stay tuned, it will show up here.

MarketBullets® Friday, March 22, 2024 Early AM

     Tepid. The crowd is quiet. The early session produced no momentum, at least thru 1:30 AM Friday morning. Thursday traded inside of Wednesday, and by the early hours of Friday was still in that range. Interest rates were working higher, as the Fed has backed off of clear rate-cut talk. The U.S. Dollar Index shows no inclination to move out of its sideways channel. The global wheat trade is seeing even the major buyers just sipping at purchases.

     Wheat futures markets moving less than 5-6 cents in either direction suggests “fair value” has been found. Any “breakouts” from carefully outlined chart patterns that happen from sneaking over the line by a cent or two are really suspicious and probably should not be taken seriously unless there is some move vigorous follow-thru following.

     Stay on plan, make the incremental sales. We need more than we are seeing to justify the cost of waiting for higher prices.

     The change is going to come. We will see it here when it does. Stay loose!

MarketBullets® Thursday, March 21, 2024, PM

     Wheat traded Thursday entirely within the previous day’s range. Chicago gained 3 cents (call it unch). KC Hard Red Winter (HRW) up 1-2, Minneapolis Hard Red Spring up 1-2, PNW white wheat: unch.

     U.S. all-wheat export sales are running about 3% ahead of last year. Shipments are lagging but expected to catch up.

     News wires are quiet.

     The wheat market trend is sideways with a slight upward bias. No buy or sell signal here. We are watching for a breakout just above this week’s highs-to-date. Chicfront-monthonth futures contracts will confirm a small upside reversal on a close above $5.56 (8 cents above) with a nearby upward target of about $5.71. On the downside, the trigger line is at $5.23 (25 cents below Thursday’s closing settlement).

KC HRW needs about 23 cents and a close above $6.05 to accomplish a positive breakout.

Mpls HRS has to find about 21 cents and a close above $6.77. All the above are within range, but the market is aware of these targets and has shown a hesitance to attack those levels.

Stay tuned.

MarketBullets® Thursday, March 21, 2024, Early AM

     Wheat is holding onto gains, although a bit tenuously. Chicago at about 1:00 AM PDT Thursday was up about 5-6 cents, back to within 3-4 cents of Monday’s highs. This creates a clear range-top challenge of the last dozen or so sessions since March 5th. This tippy-toeing around key prices is not a sign of a confident market, and it definitely takes some of the power out of the possible reversal pattern, although the pattern remains intact, and if confirmed, projects upward to something like the 38% retracement line at $5.72 in May Chicago futures. It’s just a bit fussy and a little too precious. Bah, humbug!

     If Russian wheat sales are slowing, weather is not perfect in several major regions producing wheat this year, and there is a persistent knocking at the door of expanding war, the market must add risk premium…but there really is plenty of wheat at present. There is no need to claw over the top of each other to buy wheat. Technical patterns notwithstanding, we don’t have much to buy on, but that does not mean hold on grimly waiting for better prices, either!

     Perhaps next week’s Stocks-In-All-Positions and Prospective Planting reports will provide some fuel for the bull. For now we are being asked to narrow our definition of “uptrend” to a 50-cent or less frame of reference, profoundly different than the picture we had over the last couple of years. This demands some mental and emotional stretching and gymnastics with a background of rising input costs and a feverish election season for which we are not well seasoned. The only real comfort then becomes the study of how to optimize wheat marketing plans and sales. Anxiety about the price of wheat can be reduced with a thoughtful plan that includes incremental sales and criteria that define price objectives.

     A “mere” 50-cent rally has become a grand idea! This stuff is trackable. Let’s track it!

MarketBullets® Wednesday, March 20, 2024, Closing Update

     Chicago wheat charts in early day-session trade looked like a “failure” with regard to the near-completion of a 1-2-3 reversal. The low came at a negative 14-½ cent drop around 7:30 AM PDT, but then the market managed to bounce back up and close down only 6¾ cents, enough to cloud the issue a bit, but leaving the reversal door still open. Thursday’s trade will take up the question again, although today’s trade dented the enthusiasm some. This is trading entertainment while we wait for more serious stuff.

     Egypt’s GASC on Wednesday booked 110,000 metric tonnes of wheat via regular tender, although this is quite a bit smaller amount than normal, which makes it appear that they will be applying at the wheat window in Moscow for private discounts. The export tender market seems to be trading a little bit lower than the “official” Russian minimum price.

     European wheat production forecasts are shrinking. The latest estmates have the total production down by about 4%.

     Mexican demand for corn and wheat is expected to increase, according to the Foreign Ag Service (FAS).

     India is looking at a shrinking inventory of wheat stocks.

     The Russian Ruble is leaning toward the weaker side, making already low-priced Russian wheat just a little less costly.

     The wheat price trend has paused, and is now range-bound, with Chicago’s possible break-out highs at $5.56 (about 8-10 cents above Wednesday’s close in the May contracts  - front month). The failure low would be at about $5.23 (about 25 cents below current).  

Stay tuned to this channel for the next chapter…

MarketBullets® Tuesday, March 19, 2024, Close

     A definable technical pattern is about to emerge.  Just a few pennies more and the Chicago, KC and Minneapolis markets will all display an old familiar, “1-2-3” setup for a reversal to the upside. The pattern consists of a significant low, followed by a move upward of at least a few sessions that sets a target high, a return “test” of the original low (with no new low), and then a final move upward that exceeds the first high. We are on the threshold of this thing that, when confirmed, has about a 60%-70% historical success rate. It is not necessarily considered the harbinger of a long move, but its potential reliability is interesting as a warning of change.

     Hard Red Winter wheat ratings remain steady to mildly better for most states. Kansas posted a 2% gain to 55% good the excellent. Texas welcomed a 2% better GEx to 48%. Oklahoma faded with GEx at 61%, still a solidly better stand than any time in the last couple of years. So far the overall wheat growing conditions are much stronger than in recent years.

     Considering an obvious crop in the making, the price moves of the last week or two appear technical in nature, although it is a natural time to see spring weather risk premium added back to a market that had some serious negative momentum just a short time ago.

     It's time to be more observant of the market shape. This year we will have to earn our good marketing scores.

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday, March 19, 2024, Early AM

• The International Grains Council (IGC) is forecasting that global wheat production in 2024/2025 will grow by one per cent (9.4 million mt) to 799 million mt. According to the IGC, a significant portion of the increase in global wheat production is expected to come from better crops in Australia and Argentina.

• The IGC says larger global production will be offset by small beginning stocks as total supply is supposed to be 3.8 million mt lower than in 2023/2024.

• Wheat demand is expected to be one percent higher in the upcoming season at 1.3 million mt which would cause global ending stocks to fall by two percent (5.1 million mt) to 262.4 million mt.

     The above three bullet points are a slice from a brilliant source of wheat market insight: SaskWheat. These Canadians have a clean and clear presentation, and their publication is worth examining. The aspect of this source that struck me is its simplicity and directness, also known as “Elegance”. Let us know if this impression is accurate. https://saskwheat.ca/wheat-market-outlook-and-prices/#global

     Very early trade on Tuesday morning had Chicago and KC down a couple of cents. Minneapolis HRS was off less than a penny. The U.S. Dollar Index was just a tid higher, still trading in the sideways range that has contained its price for nearly 16 months. Corn and beans were both about unchanged.  Gold continues to push new all-time highs. Natural gas is resting near long-term lows.

     This wheat market has been beating down on prices for so long that many producers have ceased any cash selling except for the absolute minimum necessary to keep running. It is intuitive to even the casual observer that there are likely to be price rallies in the weeks or months to come, but these will be against the fundamental stream for quite a while. The world does not adjust committed acreage easily, but demand does expand as price falls. If there is a season for market volatility, it is the spring “silly season” where weather becomes dominant. To this mix add war and economic fears along with a U.S. presidential election, and we have a good chance for occasional price violence. For marketers of wheat, opportunistic attitude and patience may seem an oxymoronic pairing, but it is just what is needed to do well in this environment. Contra-trend price moves are tough to capture, but patience with an uptrend is essential. The charts become more and more valuable because they reveal the behavior of the market beast more quickly than government reports or news wires.

     Chicago wheat futures, despite the leakage from canceled sales, has held onto some gains, along with every other major wheat market. It’s a little pathetic how easy it is to please us now, with upward moves of such paltry amounts, i.e. less than 25 cents per bushel, but every large move must begin with a smaller one. At least we have a clearly identified lower boundary, which if it fails, we can take action. This is no time to ignore carefully thought-out marketing plans. It is vital to make those incremental sales on schedule. This has been illustrated very clearly and repeatedly over the last year. Watch Chicago for ques and have defined objectives on the table ahead of time. Capitulation is not equal to making one or two small sales at historical lows, it is abandoning plans and dumping larger amounts under duress.

We will stay tuned. You can too!

MarketBullets® Monday, March 18, 2024, Early AM

     Copper is breaking out to the upside of a long-term negative trend channel. Lumber is also challenging its long-term channel, but that channel was slowly upward and is accelerating. These indicators are not direct wheat influencers, but they suggest a positive change in global economic activity. Another interesting short-term flash is that the Chinese Yuan is strengthening, at least in the short term. They just finished their annual BFM “Big Meeting”, during which they announced economic policy changes of which the market apparently approved. The “Hang Seng” Index is reflecting some positive lift, although not explosively. All of this suggests that there are some changes in the wind. Wheat may not have a ticket to ride on this bus, but any hint of positive change considering the exhausting long-term downward bias in wheat prices would be at least a trigger for closer examination. This is not a good time to be asleep at the marketing wheel!

     Fear not! The wheat charts do not show much upward power. The weeklies are flat and there is still dry powder in the hands of the funds' large, short-sold positions. Let's not allow Fear of Missing Out (FOMO) to be the driver here!

   This stuff is trackable. Let’s track it!

MarketBullets® Friday, March 15, 2024, Closing Update

     The Chinese purchases of late November/early December (1.1+ Million Metric Tonnes) pumped a lotta air into Chicago wheat prices. Now that air is leaking out quickly. At this point, they have canceled about half of the original total and that may not be finished. They have also cancelled or suspended about a million tonnes of Australian wheat shipments. It is doubtful that they have done so with any Russian purchases, mostly because the prices for which they had agreed are quite a bit lower.

     The resumption of the parade of new low prices may be about to resume. Going home on Friday, March 15, Chicago Soft Red Winter (SRW) was a nickel above its 3.5-year low, set on March 11. By contrast, KC Hard Red Winter (HRW) was about 16 cents above its long-term low, Minneapolis also about 5 cents over the low, and Paris Milling Wheat futures were €7.00 above (approximately $.20 per bushel).

     The wheat price trend is lower, unless suddenly the Chinese decide to return to the market. It begins to look like they decided they are going to have a crop after all.

     IKAR projects Russian wheat production to reach 93 million metric tonnes with exports at 50 million tonnes. Another heavy year from Vladimir representing a lid on global wheat prices. The rallies may be healthy, but will be mostly technically driven, fast, intense and done. “range-bound” makes a difficult trade, but it’s useful for cash sellers. It’s a chartist’s year! The obvious trade when any market is at historical, long-term lows is to look for a buy. The problem with those heavy lows is that the factors that bring them are very large and slow-moving creatures that do not die easily or quickly.

     USDA will release a very important set of data on Thursday, March 28th at 9:00 AM Pacific Daylight Time, 11:00 AM Central (10 days from Monday, March 18). Stocks-In-All-Positions quarterly inventory and Prospective Plantings, both of these datasets are heavily anticipated this time of year.

      Allendale’s farmer survey has US plantings of:

·         Corn at 93.5 mil acres, down 1.2% from 2023 (USDA 91.0)

·         Soybeans at 85.8 mil acres, up 2.7% (USDA 87.5)

·         Wheat at 47.6 mil acres, down 3.9% (USDA 47.0)

     Interest rates are steady, the U.S. Dollar Index is steady, gold is at an all-time high (touched $2,200 on March 8, 2024) and Diesel just closed at its highest since February 19. Natural Gas, a key component of anhydrous ammonia, is still in a downtrend that dates back to July of 2020.

     Overall the market is weak, and the global economy is feverish (weird dreams and confused easily). Grains in general are reaching a key low soon, but over-anticipation of lows is a bad habit. They will show up on the charts first.

Stay tuned here for more. 

MarketBullets® Friday, March 15, 2024, Early AM Update

     Chinese cancellations of U.S. origin wheat contracts have now  reached over half of the purchases made in November and December 2023. This is the most they have ever cancelled in at least the last 24 years. It is becoming clear that China either does not need the wheat or that they can source it more cheaply elsewhere. The Australians are also having some significant amounts of wheat sales to China cancelled or suspended. The wheat market has held up well during this series of contract terminations, leading some to expect more strength ahead.

     Friday early morning trade had Chicago trading mixed to unch’d. KC showed 2-4 cents lower and Minneapolis was trading up 1-2 cents. These are not markets in capitulation…at least not yet.

     The International Grains Council (IGC), an intergovernmental organization based in London, UK, has  released their estimate for a decline in grains production including wheat and coarse grains of 6 million metric tonnes (less than 1% adjustment).

     Germany is seeing cuts in wheat production acreage by about 7.5%. This, along with the IGC reduction above is not a market-moving statistic, but we take it as an indication that planted acres around the globe are likely to come down due to lower prices…not a shock, as it is what the market is supposed to trigger. “The cure for low prices is low prices” is a well-worn phrase, but it is true.

     The wheat market has put in new lows in the last 10 days. The factors that have driven us to this point are still present, but there is clearly some spring season risk premium-adding going on. Just remember that a good base from which to launch a real rally takes time. The trend remains flat to negative.

     This is a good time to watch the price momentum on the charts. When the trend change finally shows itself, it will be visible on the charts first.

     Stay on plan. Stay tuned.  

MarketBullets® Thursday, March 14, 2024, Early AM Update

     Thursday very early trade had Chicago down about 3-4 cents, KC front month (May) down 11 and Minneapolis off about 4-5. Multi-year contract lows are 10-30 cents below current prices depending on variety. The upward bias we have been experiencing is running into some headwinds, but remains intact for the moment. The overall trend in wheat prices is flat to negative, but corn and soybeans seem to be finding some rally energy, which may help sympathetic support for wheat.    

     NASA’s GRACE root zone soil moisture shows the Hard Red Winter wheat production areas of N Texas and SW Kansas better than this time last year. Overall wheat production in the Continental U.S. (CONUS) has little root zone moisture stress than the last two years.

Data / maps available at nasagrace.unl.edu through a partnership with the National Drought Mitigation Center.

     Scientists at NASA’s Goddard Space Flight Center generate groundwater and soil moisture drought indicators each week. They are based on terrestrial water storage observations derived from GRACE-FO satellite data and integrated with other observations, using a sophisticated numerical model of land surface water and energy processes. The drought indicators describe current wet or dry conditions, expressed as a percentile showing the probability of occurrence for that particular location and time of year, with lower values (warm colors) meaning dryer than normal, and higher values (blues) meaning wetter than normal. These are provided as both images and binary data files.

     Chinese wheat purchase cancellations are not just in the U.S.. Australia is also seeing some wheat sales cancelled. China is not the only buyer that can make the math work. Other importers of wheat and other grains are warming up the calculators to see if it makes sense to cancel/re-write grain buys. Bear in mind that a cancellation of a large purchase contract does not allow any buyer to simply walk away. It requires that a complex series of agreements and transactions between seller(s), shipper(s), and others be unwound. There is contract language that addresses this not-uncommon event, including penalties, which can make it expensive, but not impossible to overcome the problems created, especially in a market that has seen very large price declines in a short period. Even if China was only using the import contracts to cover perceived risks in crop production at home, it may have been ultimately a wash, as there have undoubtedly been solid futures price hedges in place every step of the way.   

     NEW DELHI/MUMBAI, March 12 (Reuters) - Indian wheat inventories held in government warehouses dropped to 9.7 million metric tons, the lowest since 2017, after two straight years of low crops prompted the state to sell record volumes to boost domestic supplies and lower local prices.

     Ukraine’s grain union projects their 2024 wheat crop will be the smallest in 12 years at 20 MMT, down some 14.5% from last year.

     This could get a little bit more interesting as the spring weather opens up. Early harvest for southern  HRW and SE areas of HRW are just 3-4 weeks away, but there is lots of weather-vulnerable wheat jout there quite a ways from the bin.

     Stay tuned.

MarketBullets® Wednesday, March 13, 2024, Early AM Update

     Dry weather in the Southern hemisphere has cost Brazil some production potential in wheat, soybeans and corn.

     Winter wheat production weather in the U.S. is at the (very) early stage of coffee-talk stage about spring weather. The market is not yet anxious, but is seeking reasons to rally. Those reasons are still speculative.

     Russian wheat prices have remained in a lower trend pattern since the first week of January. No change.

     Farm sales in Argentina have slowed, but the same is so across the globe.

     Interest rates are steady, and the U.S. Dollar Index is trading near the center of a 16-month sideways range.

     The very short-term rally in wheat is still alive, with Chicago trading very close to the lower-trending 66-day center mean line of the channel. The ratio-derived upside target would be near $5.90 in May Chicago futures, about 40 cents above current. There is no powerful factor in play to raise wheat prices, but the eyes are on weather in both the southern and northern hemisphere wheat regions. Ukraine wheat shipments are expected to continue to decline slowly, as war conditions are making farming and shipping more difficult. No surprises.

     Stay tuned here for further developments (if any).  

MarketBullets® Tuesday, March 12, 2024, Early AM Update

     Very early trade Tuesday morning showed Chicago down about 3, KC and Minneapolis both down about 5-6 cents. No violations of trend channels or other disturbances as of 3:00 AM Pacific Time.

     Crop conditions in U.S. winter wheat country are fluctuating slightly, with Texas at about 44% Good-to-Excellent as example. Most of the major winter wheat states have much better moisture this year.

     U.S. export shipments as of the end of last week were at 13.37 million metric tonnes marketing year-to-date versus 15.9 last year, just under a 16% lag. Sales have been looking better than last year, so it should be expected to see shipments catch up, even with Chinese cancellations of Soft Red Winter (SRW) Chicago wheat (about 38% of the previously purchased amount) in November and December. It should not be a shock to see additional contract cancellations with the markets so far below the original prices paid. This is not a political decision by China. It is normal when the math works to cancel/re-write.

     The current short-term behavior of wheat (corn and soybeans) has been technically more positive, especially soybeans. This kind of “corrective” action is normal and may trigger larger moves with any weather news. If the duration and magnitude of the down-move over the last 18 months or longer are taken into consideration, technical retracements could be economically significant, so it is time to be paying attention to the patterns and trends a little more closely.

     Stay tuned to this channel for trend alerts!    

MarketBullets® Friday, March 8, 2024, Post-WASDE Update

     USDA: “The outlook for 2023/24 U.S. wheat this month is for unchanged supplies and domestic use, lower exports, and higher ending stocks. Exports are reduced 15 million bushels to 710 million with reductions for Soft Red Winter and Hard Red Winter. Ending stocks are raised by an equivalent amount to 673 million bushels and are 18 percent higher than last year. The season-average farm price is reduced $0.05 per bushel to $7.15. The global wheat outlook for 2023/24 is for larger supplies, consumption, and trade with reduced stocks. Supplies are projected to increase 0.8 million tons to 1,057.8 million, primarily on higher government production estimates for Australia, Russia, and Argentina partially offset by reductions for the EU and Serbia. Global consumption is raised 1.5 million tons to 799.0 million, mainly on higher feed and residual use for the EU, Kazakhstan, and Indonesia. World trade is raised 1.4 million tons to 212.1 million on higher exports by Ukraine, Australia, and Turkey. Projected 2023/24 global ending stocks are lowered 0.6 million tons to 258.8 million, the lowest since 2015/16.”

     Everyone knows that there are too many soybeans in the world, but in the last week, there has been a technical price breakout to the upside…not a massive one, but an undeniable escape from the stat standard deviation channel. This is a pebble rolling down the hill past us…could be important. May just be a pebble. We will watch.

     Another 110,000 metric tonne Chinese Soft Red Winter wheat cancelation Friday morning, on top of a previous cancellation of 130,000 tonnes Thursday. This is normal in such a negative market, but the timing in a week when wheat was trying to rally was a net negative in Chicago. PNW white wheat also was weaker, possibly in sympathy with SRW.

     Could soybeans lead wheat and corn higher? This is not a normal thing, but it does tend to lend sympathetic support and make importers begin to pay better attention to the global market tone. The trend in wheat has not changed from flat/negative to a flat/positive, but there is a distinct pause in the downside momentum. Now we will see if crop conditions in the northern hemisphere can be maintained. Moisture is definitely not the factor it was last year or the previous year. At least we will be sitting up straighter and surfing memes less.

     Monday very early trade in wheat was unch to -1/4-cent in Chicago. KC and Minneapolis were down 3½ or so…really nothing to hang your baseball mitt on.

     This stuff is trackable. Let’s track it!

MarketBullets® Friday, March 8, 2024, Pre-WASDE Update

     World Ag Supply/Demand Estimates (WASDE) to be released 9:00 AM Pacific Time, 11:00 AM Central. Most focus on corn and soybean crop estimates. Some ideas that World wheat ending stocks estimate will be increased slightly. The market usually anticipates USDA reports by going into a holding pattern for a couple of days until after the report, and then either resumes previous trading programs, or makes adjustments according to report results. In either case there is a moderate surge in trade after the data release.

     We will issue fresh MarketBullets after the report, along with the regular weekly summary.

Thanks for your support!   

MarketBullets® Thursday, March 7, 2024, Early AM

     Following the new lows printed on Wednesday, the very early morning trade in Chicago wheat showed a steady tone with a little bounce back. The trade is aware that this market is “oversold”, but it takes a certain kind of confidence to step in front of a southbound train. The would-be buyers are determined to wait for a bit of evidence that the price decline will, if not end, then at least pause for a time. This is not hard to imagine. It is healthy to “correct” extended moves with more than a few hours of trade. This would be a quick fix, only a temporary move up, but it could be more than a few cents, maybe after this Friday morning’s USDA World Ag Supply/Demand Estimates (WASDE) report. Even if the trade gets the pre-report guesses right, there is often a “brakes off” jump after a report.

     Corn and soybeans have begun to suggest a rise out of the abyss, even if it is only to make technical adjustments, and they also have a report to anticipate, more than the wheat does, with planting estimates to be released.

     There should be no surprise if there is a rally between now and the close of trade Friday.

     There is a suggestion of a flurry of import buyers at the window this week. Egypt, Algeria and others have been actively seeking offers. Those buyers may have become lazy over the last year of hand-to-mouth buying for just-in-time inventory, but they are not likely to be unaware of the bargain buying opportunity on the table. Even if wheat continues to drift lower, the downside risk has been steadily shrinking. There has been street-talk that China may be cancelling some of those wheat purchases they made back in November…Yes, its getting that cheap!

     We are getting close to some kind of low, but it is not a good trading plan to jump ahead anticipating a bottom. There always seems to be one more lash from a dying dinosaur’s tail that can be lethal. The trendline is unmistakably lower until it is not.

     This market is getting more interesting, and it is trackable. Let’s track it!

MarketBullets® Tuesday, March 5, 2024, Close:

     Now the 8th Chicago Soft Red Winter (SRW) wheat session with downward bias since the most recent high bump of Feb 22, minus 48 cents.

     Kansas City Hard Red Winter (HRW) is building a base, with three lows in the $5.56-$5.60 range, the failure of which would stimulate some selling energy.

     Minneapolis Hard Red Spring (HRS) has shown the most positive attitude of the 3 major U.S. futures contracts, with a double bottom around $6.41 and a net gain of about 12-13 cents in the post-Feb 22 peak.

     PNW Soft White Winter (SWW) has achieved a negative 50-cent move in the above time frame.

     Pre-report guesses starting to emerge going into Friday’s World Ag Supply/Demand Estimates (WASDE): the surveyed trade pundits are indicating an average expectation for smaller all-wheat ending stocks by a very small adjustment of 200k bushels down to 657.8 million. The range of guesses was very wide, but almost evenly balanced (make of that what you will). Global wheat carryout is expected to shrink by 1.3 million metric tonnes, largely due to greater demand on lower prices. 

     Gather all of the above, mash it into a mason jar, add moisture with a dash of aggressive Russian and Ukrainian sales. Then set it on the counter next to the toaster and go out to the shop. When you get back, it will still be there, making a bad smell. You can use it on the driveway to kill weeds.

     The trend remains negative, but downside risk is shrinking. Stay on this channel.

MarketBullets® Tuesday, March 5, 2024, Early AM:

     Corn and soybeans are dominating the wires, with China buying from Ukraine and some from the U.S. and beans hitting five-year net short-sold positions in the hands of the funds. The problem the bean markets has to solve is where all of the {potential) beans coming along in Brazil and Argentina will go before the U.S. crop hits.

     Grain futures are testing trend channel tops, creating pressure on the trade to choose a side. With all of the recent lows along with spring work top-of-mind, farm selling has slowed, but a successful breakout of the range tops would stimulate some sales, keeping the brakes on larger upward moves in any early rally.

     Wheat markets are close enough to long-term chart lows that the slow cash wheat movement is bound to have at least a supportive effect, but the same problem appears; any rally beyond the established overhead resistance is bound to trigger sales.

     Some global wheat price strength came out of India’s troubles in the last week or so from crop damage due to weather, although this is not a big export source.

     U.S. wheat exports are lagging at a steady 16%-17% behind last year’s pace. With 13 weeks to go in the marketing crop year, we may see some adjustments start to appear in USDA’s estimates.

     There is a World Ag Supply/Demand Estimate report due out Friday, March 8 at 9:00 AM Pacific Time, 11:00 AM Central. The March WASDE does not usually trigger wheat price adjustments directly, but it is a key report for beans and corn.  Many eyes will be on this one.

     The wheat trend is not changed from sideways to lower, although the season to expect such changes is upon us. The leader in global wheat futures is likely to be Paris Milling Wheat, an 11.5% protein contract that is the current proxy for Russian wheat price indications. Paris has been printing low after low, with hardly a nod to the buy side. It is getting “oversold”, a condition that always seems to last much longer than it should!

     Stay tuned. The WASDE on Friday will keep the trade occupied for the next few days.  Steady.

MarketBullets® Sunday PM - Monday Early AM, March 3-4, 2024:

     There is a terrific temptation to buy wheat, if not today, then soon. The problem with giving into such a magnetic pull from the market is that this phenomenon has occurred multiple times over the last 6 months without follow-thru, i.e. “If you liked it at $6.00, you gotta love it at $5.55.” There is no current buy signal, nor is there any currently looming fundamental reason for wheat prices to ration supply. There are rational possibilities that need to be monitored, mostly concerning either production weather in the northern hemisphere or money movement out of exhausted, overbought outside markets, but these are not actually on the market radar screen yet, just a glint in the fund manager’s eye.

     Country movement of grains from the farm to the end-user has slowed to a crawl all over the globe. This is a supportive price factor, but it is temporary, as all it takes to shake it loose is a price bump. Eventually the stuff has to be sold, so it is really powerful to sell incrementally on a plan. If the logic is, “Sell slowly on the way up, and sell rapidly on the way down.” the current configuration is to go ahead with the next tranche and, if the price turns upward for reasons not yet discerned, then hold the next sale. The objective being to end up with an average sale for the year above the “indicator of central tendency” of your choice. This has served us well for this year to date, with steady liquidations that all look brilliant at this point.  

     Sunday night into early Monday morning wheat futures trade shows wheat within a couple of cents higher or lower, nothing to trigger any actions. When the change comes we will see it!

     This stuff is trackable. Let’s track it!      

MarketBullets® Sunday PM, March 3, 2024:

For your consideration: When charts are applied in trading or controlling risk, the eye is the instrument. Knowing the trend is step one. The perception of possible benefit from price movement is not the same for any two of many thousands of participants active at any given moment. There is no magic, no formula that always produces profits, no system that is always right. The Ai may catalog and back test faster than ever, but the market is not a machine. It is a living, breathing being with emotions and motivations all its own; motivations which change depending on whose money is at stake and what matrix of data is being applied. With all of that, it is as predictable as weather, or as groups of human beings may be. It is not random but runs on a calculus of probability that is subject to a sort of quantum “observer effect”. It is not a casino unless you treat it like one. It is a risk exchange for real-world risk that exists naturally and must be dealt with by anyone in the business of growing, handling, shipping, or consuming commodities. Anyone who “rolls the bones” in the futures market without due regard to statistical probability is subject to the same results as in a casino. Some of us can afford the gambler’s approach. Others recognize that it is a business with risk that must be managed. None can expect economic survival if entering the futures market without rigorous limits on exposure. Price charts are the prime tool for measuring this exposure.   

MarketBullets® Friday, March 1, 2024: Close

The trendline has not changed. It remains negative, with Paris Milling Wheat signaling a lower path on Friday. The market is telling producers to hold up on sales, which they are doing. Meanwhile, there is plenty of wheat for sale already.

More details on Sunday evening. Stay loose! At least it’s not boring!

For charts used in trading or controlling risk, the eye is the instrument. The perception of possible benefit from price movement is not the same for any two of many thousands of participants active at any given moment. There is no magic, no formula that always produces profits, no system that is always right. The Ai may catalog and back test faster than ever, but the market is not a machine. It is a living, breathing being with emotions and motivations all its own; motivations which change depending on whose money is at stake and what matrix of data is being applied. With all of that, it is as predictable as weather, or as groups of human beings may be. It is not random but runs on a calculus of probability that is subject to a sort of quantum “observer effect”. It is not a casino unless you treat it like one. It is a risk exchange for real-world risk that exists naturally and must be dealt with by anyone in the business of growing, handling, shipping, or consuming commodities. Anyone who “rolls the bones” in the futures market without due regard to statistical probability is subject to the same results as in a casino. Some of us can afford the gambler’s approach. Others recognize that it is a business with risk that must be managed. None can expect economic survival if entering the futures market without rigorous limits on exposure. Price charts are the prime tool for measuring this exposure.   

MarketBullets® Friday, March 1, 2024: Early AM

     USDA Export Sales reports showed 327,300 metric tonnes sold as of Feb 22, a 40% improvement for the week, 15% above the same week last year. Total marketing year sales stand at 18.16 million metric tonnes, 6% ahead of last year’s pace. The bookings included 6 million tonnes of Hard Red Spring, 4.6 Soft Red Winter, 3.7 Soft White and 3.3 of Hard Red Winter. Shipments continue to lag last year’s pace.

     The wheat futures market is slowly building a “base”, that is a chart price structure that discovers reliable price levels that large numbers of buyers (or sellers) regard as economically desirable trade points. Once these levels become visible, then there is a technical potential for rising prices from there.  The sell side of the equation then finds reinforcement to be more patient, allowing the buyers to bid up the price gradually. It does not require crop disaster or other “Black Swan” events to push wheat prices higher, only good, steady business that consumes wheat, which requires prices high enough to pull wheat out of the hands of producers.

     There is no signal to buy here, but there are a number of traders who “have their buying shoes on”, and many are paying close attention to the charts.  A rise above $5.95 in May Chicago Soft Red Winter wheat futures would attract buying attention, and a rise above $6.13 would serve as a confirmation of a new upward bias. KC Hard Red Winter needs to see a closing series above $6.37 to confirm, while Minneapolis Hard Red Spring would be positive above $7.10. PNW Soft White wheat needs a boost above $6.50 to claim a confirmation of uptrend. All of these targets are subject to change as the chart patterns develop, but they are fairly reliable inflection points, presently far above the trade, but it can be amazing to see what can happen when the market begins to perceive reasons to buy.

     In keeping with a recent emergence of a natural gas price bottom, fertilizer is beginning to rise again after a protracted decline. This can be a good indicator to secure some anhydrous pricing. Don’t let it go to waste.

     Wildfires in Texas, in and of themselves are not a market driver, but they may be viewed as a precursor to later dry conditions that may stimulate wheat market interest in adding premium based on crop conditions. It bears observation.

     The trendline for wheat remains lower, at least in the 58-day channel for Chicago, which shows trading very near the center line of the downward channel. The Russians will continue to sell wheat at whatever it takes to keep their markets captive. End-users are aware of this, hence the lid on wheat prices. Stay tuned here, as this stuff is trackable. Let’s track it!

MarketBullets® Thursday, February 29 (Leap-day), 2024: Early AM

     For Leap Day, the grain futures markets are entering First Notice Day and regular delivery periods for March. The lead contracts are now completely switched over to May (K). The normal rollover has been taking place for the last 2-3 weeks. The spread between March and May contracts was small, only about 3-4 cents, so the continuous front-month charts will not show anomalous patterns as a result.

     The May Chicago wheat futures price is sitting right on top of its 57-session geometric mean, on a downward slope since December 6, 2023. All of the work done in rising up from the lows of February 20 have gained less than 25 cents per bushel.

     The downtrend is intact, even with the potential of a 1-2-3 reversal bottom. We will monitor the reversal pattern with interest, but not much confidence. At this point there is little to drive the market very hard in either direction.

     Stay tuned, it will get more interesting presently.  

MarketBullets® Tuesday, February 27, 2024: Early AM

     The very short-term (daily) chart in Chicago has set $6.00 in the March futures as the technical target to break out. The little 1-2-3 reversal pattern bears a fairly reliable risk/reward percentage of 65%-70% success, but the return is variable and not large. It is often a harbinger of further upward movement, but we will have to see something more than that minor signal to put much into the idea. For traders, it’s a reasonable short-term signal. For marketers, it is only a “hold” with a defined exit at the initial low, in this case that is the low of Feb 29 at $5.55 March. All of these levels will have to be translated into May futures figures, about 4 cents lower as of this morning’s Mar/May spread.

     All of the above may be considered entertainment while waiting for the larger trend to change. It is part of the development of a base, as the market tests and consolidates a price level at which buyers are comfortable taking new positions and sellers become defensive.

      As an example of U.S. winter wheat crop progress, the rating in Texas was 46% Good to excellent for the period ended Feb 25, and is about 8% headed. The condition of most of the heart of winter wheat production is steady to improving at far better numbers than the two previous years at this point.

     Wheat export sales are about 7% ahead of last year’s pace, but shipments are still lagging about 16% Year over Year. It is expected that the inspections for shipment will catch up.

      The trend is paused. There is a possible change heading into the spring weather season.  Stay tuned, this stuff is trackable.

MarketBullets® Monday, February 26, 2024: Early AM

      This wheat market knows that it does not have to work hard to find wheat for sale, even though country movement, aka “Farmer selling”, has been slowing for weeks. Even with low volume of physical trade at the farm gate, the end-users have been richly rewarded for buying only hand-to-mouth, a pattern that is not likely to change until there is a threat of higher prices clearly established.

     Russian and Ukrainian wheat continues to move at an astonishingly consistent and firm pace. It is difficult to imagine farming, selling and shipping under the circumstances of war. Have you checked your field roads for mines lately? The sanctions seem not to have had much effect on Russian grain or oil sales volume. The new batch of economic punishments seem to be of the “declining return on effort” variety. We shall see.

     U.S. wheat export sales (Not shipments) are actually up about 6% YOY. There is a reasonably good crop stand about to head out this spring.

     The trendline is dull at best. KC, Minneapolis and Paris are each at long-term (2.5-3 year) lows. Chicago, having received some Chinese assistance in late November/early December looks better on the chart, but has had no follow-thru since. What does one do when the price is at heavy lows with no sign of relief? Stay on plan, make the incremental sales on schedule, use the pricing tools when it makes good sense. The sting of selling at or near LT lows is eased by the fact that they are mere increments, and that there remains downside risk that will make the painful sale look good later (as they have done for many months).

Stay tuned, and stay on this channel.

MarketBullets® Friday, February 23, 2024: Chart and Table Update

     The week produced a mixed wheat performance. The trend remains sideways to negative, but the upward sparks show that there is potential for a technical rally. Short-covering rallies are often hot, fast and usually short-term, but they can trigger larger moves if there is any kind of supportive fundamental factor. In spring, weather is the most influential. Extended rallies, though require more basis than is currently visible. 

More on Sunday night. Stay tuned.  

     MarketBullets® Friday, February 23, 2024: Early AM

The prospects for northern hemisphere crops; wheat, corn and beans, are swelling slowly but surely. With Brazil’s planting progress for 2nd crop corn and soybeans, there are no fundamental changes that would be anything like what we would have to see to ration forward supply in the futures market.  That is a heavy lift for wheat, especially looking into the barrel of the Russian (and Ukrainian) wheat export guns.

     We are seeing a nice rally, almost certainly the result of money moving to cover profitable short positions and add longs heading into the “Silly Season” during the next couple of months. All the way through June and on into July the weather forecasters get a workout every day. Early morning trade in Chicago had the front month (March soon to roll to May) at 33 cents above the lows from last Tuesday, the best this market has done on the upside since mid-January. The Present trade is above the mean line for the last 20 sessions, and is less than 15 cents below the 60-day moving average (the trigger line for the Box-o-Rox benchmark – please call for details)…If you are not beating the Box-o-Rox approach, you need to adjust your marketing plan. It is the most basic measurement of performance.

     The trendline is downward, in spite of the improved behavior of the last week. Stay on plan.

This stuff is trackable. Let’s track it!

MarketBullets® Thursday, February 22, 2024: Early AM

     Some follow-thru in Chicago charts, up 4 at 4 AM. KC and Minneapolis also showing some positives, up 5-6 each. Interest rates are rising, although the Dollar Index has paused in its sideways channel after climbing back to the center of its 15-month range.

     Texas weekly crop progress shows winter wheat 15% headed as of February 18 versus 11% normally. Crop readings say 40% good-to-excellent, far better than the last couple of years.

     Weekly U.S. wheat physical export shipments are running 17.5% behind last year’s pace as of the week ended February 15.

     Most March futures positions will be rolled into May as the new lead contract over the next week. This is a normal shift that takes place every time a contract is approaching near delivery and expiration. Deliveries against futures contracts in Chicago will commence on the first business day of March and run for a couple of weeks until the contract expires.

     The wheat market has been a little more interesting for the last few sessions, but no significantly new patterns have been completed at this point. The market may be beginning to add weather risk premium as it does every spring. The northern hemisphere is showing fairly good wheat growing conditions in most areas, although the gentle winter and  relatively rich moisture conditions will cause many ag pilots to have a great spring flying on fungicides. The world is not about to have wide and serious wheat crop problems, so market conditions are likely to be tricky ahead, even though the magnitude of the downside risk has been reduced since  last fall (There is still downside potential).

     The trend is sideways to mildly negative.  It will take more work this year to make good marketing decisions than it has been for the last year or two.

This stuff is trackable. Lets track it!

MarketBullets® Wednesday, February 21, 2024: Early AM

     Tuesday’s one-day bounce looked like a short-covering rally. There is some confusion about if the funds and other large speculators were the driving force, but there are few alternative explanations. (See “hot-burning and short-lived in the previous day’s comment). The market had become overplayed on one side. Eventually, any market will pause a trend that has been so consistent for so long.

     The Chicago charts allow that there might be a change in direction to the upside, but one day does not a new trend make. The base we need to see is at least one successful test of the recent low, followed by a breakout above the early high set Tuesday or very soon after. The 60-day moving average is just above $6.03, 25 cents or so above Wednesday’s early AM trade, without much of a slope. The completion of the 1-2-3 pattern initiated as described above would be the first attempt to turn the market back to positive since at least mid-January.

     We need to see some fundamental support to mount more than a hot-shot corrective bounce. This time of year in the northern hemisphere is often a dull season, but the spring weather market is just around the corner, with the spring equinox on March 20th. Meanwhile the market is watching the Black and Red Seas for war inputs, and the southern hemisphere is still providing some market guidance with weather on harvest season.

     Until the trend actually is able to verify a new upward bias, the definition remains lower. Stay tuned to this channel for changes.  

MarketBullets® Tuesday, February 20, 2024: Early AM

     There is just a glimmer of light this AM for wheat prices. Chicago is creating a little momentum with an 11-cent jump. KC is showing 17 cents up, while Minneapolis is up about 7.

     It’s the funds and outside markets mostly on the radar screen, covering their short-sold contracts, an activity that always produces some buying interest. This kind of market fuel is hot-burning but short-lived. It can trigger more power for a few days, but is a very tough trading wave. There will be some wheat shaken out of the tree on the rally.  

     Wheat is in the leadership position, as corn is only up about 1-2 cents and beans 7.  

     Diesel is a cheerful spot, down almost to the lower boundary of its short-term (48-session) upward channel; just a little more and it will break out and open the door to more technical pressure.

     The U.S. Dollar Index is trading quietly near the center of its month-to-date range, still on the strong side, but without creating anything new on the charts.

     There are no new factors in the mix. Global exports are slowing, even as Russia and Ukraine both continue to capture a big market share of sales.

     Wheat is bouncing off of what appears to be a double bottom with the previous low at the same price range back in November. This kind of pattern historically shows a sweet 73% success rate, but a “mediocre average rise”. Its in the category of contra-trend trades, which are notoriously difficult to capture without injury to the trader, but this can be useful if applied to a good, incremental marketing plan. At least it provides an exit signal on failure of the previous low as a trigger. The trend remains lower, but all trends eventually end. It may be that we are seeing an inflection point. As long as the price remains above the low from last week, it seems logical to try to be patient with new sales. Its way too early to declare.

 Stay tuned. There will be more!

MarketBullets® Friday, February 16, 2024: Early AM 

Early morning trade in Chicago Soft Red Winter (SRW) wheat was at just 6 cents above the multi-year low printed in the last week of November 2023. Once the futures contract reaches so near a key low, it becomes almost magnetic. If this market turns away from that low in the next couple of days without making a new one, it will be a technical phenomenon called a “double bottom” and would create an inflection point to measure by. If that low fails, it will encourage the money funds to continue to sell, but will also discourage the producers from moving cash wheat. Movement from the country is already dragging. This could crimp it off even more. So this is a moment of some interest and will reveal market tone.  

Paris milling wheat has been hammering out new lows, and has now reached under the €200 per metric tonne level, not seen since mid-July of 2021, well before the Russian invasion of Ukraine. Paris represents European milling wheat values and is sensitive to Black Sea exports. It is a key global pricing point, and it is in a strong downtrend. 

Diesel is still coming down off of recent highs, but is trading near a 45-day upward geometic mean line. The overall outlook remains upward. 

Natural gas is near lows dating back to June of 2020. This key input to anhydrous fertilizer production is helping keep a lid on nitrogen.

The wheat price trend is downward. The duration and intensity of the move since December will require some changes in the fundamentals, which will probably show up first in the charts. We are tracking both. Stay tuned. 

MarketBullets® Thursday, February 15, 2024 : Close

Wheat markets all lower on the day. A test of the Chicago long-term low set back in the last week of November just before before the Chinese-sponsored rally is clearly in the nearby. No evidence of an identifiable low. USDA Outlook reports were not surprising but supplied no price positive data or conclusions. There is no specific event or news wire story that is driving this market, just too much wheat available for sale and a lot of spoiled buyers and end users (not to mention a group of confident fund managers holding some sweet-looking short positions. There will be some abrupt rallies, but even a couple of days rallies does not a low make. It will take time to turn such a powerful downtrend. Even a dying dinosaur can hurt you with a twitch of its tail.

Stay tuned. Track this trend. It will pay to be aware and have a plan.   

MarketBullets® Thursday, February 15, 2024 : Early AM 

“It's like a nightmare, isn't it? ...Just keeps gettin worse and worse.” * The U.S. wheat markets are not alone in their relentless decline. Corn and Beans are in the same rig. Paris milling wheat printed an emphatic new low on Wednesday. France just announced a decline in wheat exports into Southern Europe for the upcoming season based on expectations for Russia to continue to dominate.  

The funds have accumulated record net short-sold positions in corn, beans show historically heavy shorts, and wheat continues with significant net shorts. All of this points to a short-covering rally at some future point, but that pre-supposes a catalyst that is enough to spook the aggressive, speculative money managers. They are running fearlessly with no visible threat right now. “Oversold” is a subjective, not-very-specific condition that can last much longer than reason suggests, and then turn in a hot minute. This is not a very tradeable indicator from a buyer’s perspective, but it does provide an idea that when the rally does arrive, it will be swift, strong and temporary. This can be useful to an observant marketer who may be behind on old-crop sales, or under-committed on new crop.  

USDA will release a fresh Grain and Oilseed Outlook Thursday morning a 4:00 AM Pacific, 6:00 Central. These reports are just a deeper detailed examination of the WASDE from last week and some discussion of impacts. A good general summary.

On the long-term charts, wheat is definitely within a heavy past price-support zone. The problem with using a decade long data series is that any pattern projections require a very wide error allowance. The primary support zone is $1.00 wide, and the secondary support zone is 2-3 dollars lower. It is possible to be exactly right, but still have a $2.00 per bushel loss before any recovery occurs. For most of us, that is a tough budget item. The LT charts do provide a background piece that strongly suggests that we anticipate some price recovery in the forseeable future, like 12-18 months, but the decisions will have to come within much shorter timeframes.  

Tom Cruise does eventually beat the trash-talking Grady at pool. He does not capitulate. Neither should we. Stay on plan. Extend sales into new crop. Talk to your merchant. Stay tuned to this channel.  

*Grady says to Vincent in “The Color of Money” (1986 Cruise – Newman movie). 

MarketBullets® Wednesday, February 14, 2024 : Early AM 

At about 10 PM Pacific Time in the early trade for Wednesday’s session, “Something” happened... The futures market in Chicago dropped 16 cents in about 25 minutes (see top chart on this page), followed by a quick bounce back about halfway from the low point. This is not a crazy move, but it is also a little bit unusual. There was a day when a couple of phone calls could locate the source of such a move, but the electronic night sessions are silent, with orders being placed from dimly lit desks all over the world by a mouse-click or two. Probably some standing sell-stops were hit, adding to the volume (about 4,085 contracts), but it appears to be a wheat-only event. In the same time frame, Kansas City Hard Red Winter (HRW) has printed a new low back to the first week of July, and Minneapolis Hard Red Spring (HRS) has also set a new low. There may be explanations available on Wednesday. It may be a little like driving by that tanker truck on fire by the side of the freeway...never to be heard about, or it may be the first tremor of a larger event.  

Random announcements from several government ag agencies and some private estimators show moderate declines in expected wheat acreage in the new year. This cannot be much of a surprise, as the price of wheat has declined several dollars per bushel (as you know, of course). This is exactly what the supply/demand balance is supposed to be doing, adjusting supply to match price. The wheat acreage is not totally elastic, but there are wide areas of “swing acres” that are available to other crops. This is a phenomenon that brings some hope that the long and dismal decline in prices may be finding reason to set a low.  

Interest rates are showing a rising tendency.

There is clearly a test of the recent lows and a threat of another range lower for wheat. The trend is lower. The slope is mild, but well defined, and new lows are frequently followed by more new lows.  

Stay on plan. Consider extending into next year with some coverage. Stay tuned to this channel. If the trendline changes, we will see it. 

This stuff is trackable. Let's track it!     

MarketBullets® Tuesday, February 13, 2024 : Early AM

     Chicago Soft Red Winter (SRW) wheat futures are technically about as flat sideways as they ever portray. The 60-day moving average, the 30-day median price and the 93-session geometric mean are all within a dime of the current trading price. Flat. Kansas City Hard Red Winter (HRW) and Minneapolis Hard Red Spring (HRS) ar in the same pattern. Paris Milling wheat is weaker, with a low last Thursday dating back to mid-July of 2021.

     Chicago futures are now trading nearly on par with Kansas City front month futures with a sharp trend toward a discount, a relatively uncommon relationship seen only about 30% of the time since the mid-seventies.   

     On balance, the money funds are still selling wheat, as well as corn and soybeans. There is little to threaten their positions, but they will become more sensitive as the spring and early summer weather season approaches.

     In spite of concern about low export prices, the Russians are considering expanding their sales beyond their previously set quotas, with another large crop anticipated ahead.

     From Grain Central, Tuesday February 2024: “Rather than taking the quickest route, navigating directly through international waters to the Bosphorus Strait, vessels hug the coastlines of Ukraine and North Atlantic Treaty Organisation (NATO) members Romania, Bulgaria and Greece, escorted by the Ukrainian Navy. Sailing through NATO waters provides extra security, and the new corridor does not require the laborious and slow inspections Russia required under the previous deal.”

     The trend is holding sideways, but has established some support lines, the failure of which will almost certainly trigger more vigorous selling energy. For Chicago (technically the strongest contract) the selling tripwire is around $5.83 with a confirmation at the January low at $5.73, about 20 cents below current trade. KC’s line is $5.87 (9-10 cents below current), and Minneapolis is $6.79, about a nickel below very early Tuesday trade.

     Stay on plan. Make the scheduled sales, both old and new crop. The price outlook is negative until a visible shift occurs on the charts, which we will see when it comes.  

MarketBullets® Monday, February 12, 2024 : Early AM

     Even the Russians are fretting about low global wheat prices. They have increased export taxes and appear to be considering slowing sales to relieve negative price pressure. Vladimir may be chuckling into his Stolichnaya as he contemplates the future prospect of his ability to influence global food prices with future expansion of control of wheat production areas in Ukraine.

     Part of this week’s quiet is due to holidays in China and Brazil.

     The U.S. Dollar Index continues to increase within its 14-month sideways channel, but is not more than a minor influence on global competitiveness of U.S. wheat.

     USDA will be releasing its Wheat Outlook Summary on Monday, a statistical review that is not a carrier of market surprises, but a sober look at fundamental market trends. It’s pretty dry reading, but it is quick and helps in setting background colors.  

     On the whole, because of improved moisture, U.S. wheat growing conditions are better than they have been for years.

     If there is a market rally in the next 60 days it will be mostly driven by weather-based uncertainty, but that is a slender reed. The charts do not show any tendency to bounce more than 50 cents without a powerful factor that would be obvious if it showed itself.

     Until there is a change in market tone, holding wheat in storage without price coverage is likely to be an expensive strategy. It is time to be close to your favorite merchant, discussing forward sales and clearing out old crop in the bin. The wheat price environment is going to be challenging in days ahead.

This stuff is trackable. Let’s track it!  

MarketBullets® Friday, February 9, 2024: Early AM

As for the February WASDE is concerned”

     The outlook for 2023/24 U.S. wheat is for stable supplies, lower domestic use, unchanged exports, and higher ending stocks. Projected ending stocks are raised 10 million bushels to 658 million.

     The global wheat outlook for 2023/24 is for increased supplies, consumption, and trade but lower ending stocks. Projected 2023/24 ending stocks are lowered 0.7 million tons to 259.4 million, the lowest level since 2015/16, on decreases for India, China, and Ukraine.

     StatsCan’s Grain Stocks report as of year-end 2023  put wheat stocks at 20.68 million metric tonnes. The average pre-report trade estimate was on the money, with a 10% YOY decline.

     This is not the kind of refrain that causes the crowd to stand up. It does release any planned sales that had been paused by money managers or other aggressive entities pending the reports.

     Failing other developments in the meantime, the next USDA data outside of the March WASDE release will arrive in late March in the form of a new Planting Intentions report, featuring corn and soybean acreas. The “sister grains” have not provided any cheerful market energy of late, with Chinese buyers being cautious, and large Brazilian/Argentine crops for sale. The prices of corn and beans can provide color to the background of wheat markets, but just now that color is gray.  

     Wheat has had a long, 21-month drop, in which Chicago has given up $7.00 per bushel since May of 2022. KC Hard Red Winter (HRW) cashed in $7.82, Minneapolis Hard Red Spring (HRS) dropped $7.29, and PNW Soft White Winter (SWW) is $5.45 below that same May ’22 point. Looking at this is a little melancholy, but the bright side is a potential 38% bounce (the smallest realistic ratio), is a solid chunk of gain. For example, SWW should consider what a $1.50 TO $2.00 per bushel rally could do for the attitude. The only bug in the soup is that it’s likely to take time. There should not be any expectation of a six-month move without a crop failure.

     The USDA report was a dud as far as positive wheat price trends go. The sideways to negative trend channel abides.

This stuff is trackable. Let’s track it!  

MarketBullets® Wednesday, February 7, 2024: PM

     The wheat market is set, the tripwires are taught and the bait is laid out. The hunting has been sparse lately and the trade is hungry for a move. Thursday’s World Ag Supply/Demand Estimates may be the only game in town.  There will be scrutiny of global and country production estimates and wheat balance sheets. The market reaction may be energetic or tepid depending on how the pundits and money funds perceive the data. Producers and merchandizers are mostly observers, although there are always bills to pay, so some wheat will move. Meanwhile the price is unlikely to break out of recent ranges until the reports are released  at 9:00 AM Pacific time, 11:00 Central on Thursday. By 9:30 PST the story will be told and absorbed into history. Sometimes its these reports that catalyze trends. No we wait.

Stay tuned, Wheaties!     

MarketBullets® Wednesday, February 7, 2024: Early AM

     Chicago is below its 60-day moving average, with the slope horizontal. Not a trending market. The USDA report Thursday morning sees many traders willing to stand aside in such a bland market. Country movement of wheat is at low levels even with plenty of stored, unsold wheat available. The most visible upside futures target in Chicago March contracts is about $6.50, the high of the first week of December, immediately following the strong series of export sales of Chicago Soft Red Winter wheat to China. It will take a factor not currently visible to pull wheat up the 55-60 cents per bushel above current trade to hit that level.

     Wheat growing conditions are decent and slowly improving in the U.S. with adequate moisture in many areas that had been missing for a couple of years.

     Chart base-building can be a tedious business, but the size of a proportional retracement to match the massive downward move from the all-time highs of March-April-May of 2022 requires a wide base. Positive factors will emerge.

     There is still downside risk for wheat prices, but that has been reduced over the last 21 months of trade (see long-term chart <here>.  

Stay warm. Stay loose. Stay tuned.      

MarketBullets® Tuesday, February 6, 2024: Early AM

     Take a look at the “Camshaft pattern” range. That is our breakout channel. Once the market escapes this range the odds of continuation get a little higher in either direction.   

     U.S. wheat export shipments for the last week brought the Year-to-Date total to 11.27 million metric tonnes versus 13.8 million tonnes last year, about an 18% lag YOY.

     January USDA World Ag Supply/Demand Estimates (WASDE) and Grains: World Markets and Trade reports will be released on Thursday morning 9:00 AM Pacific Time, 11:00 AM Central.  The market will be likely to hold back on trade volume just before the report, then accelerate afterward. If there are surprises (figures that vary significantly from aggregated pre-report trade guesses) the markets react quickly to account for the differences. This is a game that is played every month. Once the adjustments (if any) are absorbed, then prices move on, sometimes only a few minutes after the report. Occasionally the WASDE or other USDA reports provide the catalyst for major market directional shifts.

     The wheat prices of the major markets are in a sideways pattern. Tracking the breakout will yield ideas for the next phase.

MarketBullets® Monday, February 5, 2024: Early AM

      For the sixth session out of the last seven, Chicago wheat futures are at the bottom of the recent range, once again looking for support. This incessant pounding on support is a classic “barbarians at the gate” kind of setup. There is little to do but wait to see if they crack the door. If the price penetrates below the range (only 5-10 cents below very early trade on Monday morning) then there is another branch at $5.73-$5.77, the old 78.6% ratio retracement line which was reached January 16th. These are the classic “support zones” at w which enough buyers were revealed to turn the market back upward.

     It’s a waiting game.

     The Dollar Index is rising, now back to December levels, having bounced off of previous well-defined support dating back to the end of January. The Russian Ruble is weakening, making their wheat less expensive in dollar terms. Russian Urals crude oil is trading less than $10 below Brent crude, the strongest pricing for Russian oil since the Ukraine incursion began. Interest rates for 30 and 10-year notes are pulling back lower, still in the context of a very large upward move since December of 2020. This batch of data is mildly negative for wheat prices.      

     On a brighter note, Diesel prices are declining for the last 6 sessions, although it remains within the 37-session upward stat channel. This has little direct bearing on wheat, its just nice to see at the pump.

     The trend for wheat is not positive, but is obviously seeking some kind of pause, if not a low. There is still room for more downside. Make incremental sales on schedule if you have not already accelerated. When the bounce comes, it may be strong, but we can never know when or from what price it will begin. Call your merchant and discuss price floor strategies that may allow some open upside in the event of a rally. Meanwhile, stay tuned. There is always more!  

MarketBullets® Friday, February 2, 2024: Close

MarketBullets® Thursday, February 1, 2024: Early AM

     Friday early AM trade shows a positive start toward net weekly gains for all three U.S. domestic futures contracts. PNW White wheat is seeing a little more interest from overseas buyers, which coupled with slow country movement could be a supporting factor for the sleepy Portland white wheat traders.

     No change in trend, although after midnight trade in Chicago front month futures was back above the “Box-O-Rox” 60-day moving average (the arbitrary trigger line that suggests slower sales when the price is above and faster sales when the price is below the line). This is not a signal for speculators, but an indicator and strategic operand for cash sales activity. Call for more detail.

     Next Thursday morning we will see the February release of the World Ag Supply/Demand Estimates. If there is any debate it will be about production in the southern hemisphere. There are ideas on the street that Australian wheat is doing better than earlier projections on timely rains. U.S. domestic balance sheets should not be experiencing any dramatic adjustments at this juncture.  

     The wires are quiet – too quiet. We should be hearing more noise, at least from the crickets. All of the apocryphal stories about Bigfoot speak of “that time the woods went silent”. Or maybe we are just displaying cabin fever. Meanwhile the wheat market tone is a bit better.

     Stay tuned. If something changes we will see it.  

MarketBullets® Thursday, February 1, 2024: Early AM

     Wednesday evening’s close in Paris Milling Wheat futures saw a new long-term low dating back to July 26, 2021. This contract has become the canary in the mine for bread wheat prices on the European continent. The bulk of Russia’s wheat is also higher protein “bread wheat”. Due to the sanctions on banking and insurance, Russia’s “Black Sea” wheat must trade below the regular price, although the discount has be reduced over time. China receives a large proportion of Russia’s wheat exports, but India, Egypt and Turkey all are regular customers. The reality is that if Putin is able to gain control of Ukraine’s food crops, energy production and even uranium mining, Russia’s influence in global affairs will expand considerably. In the long run, Russian and Ukrainian wheat hectares will be aggressively farmed with or without Putin, pushing a large proportion of all global wheat export sales. For now, the amount of wheat leaving Ukraine is significant, and while mildly astonishing under wartime conditions, it will expand in the future.

     The trend in wheat is weak, with lows still in the future. When those lows will emerge on the charts, with fundamental data support evident, it is not today.

This stuff is trackable! Let’s track it!     

MarketBullets® Wednesday, January 31, 2024: Close

    Wednesday brought more flopping about, with declines taking back most of Tuesday’s gains. The Chicago front month  futures are still within recent range boundaries. No change in trend direction or intensity…flat to negative.

     BAGE (Buenos Aires Grains Exchange) reports completed wheat harvest of 15.1 MMT, 3 million metric tonnes below the original projections. This is 24% above last year’s drought-hit crop. Now we will see what the new administration will do about export taxes.  

     Ukraine is expecting total exports for 2023 at 17.7 MMT for Ukraine, a 3% increase YOY. Increased export capacity off of the the Danube river Romanian ports, accounted for the increased figure.

MarketBullets® Wednesday, January 31, 2024: Early AM

     In the Eastern PNW wheat country, this year’s weather data to date is predictive of stripe rust. The Walla Walla County Extension News publication has a thorough article including vulnerable varieties. Phone: (509) 524-2685, Email: dmoberg@wsu.edu.

     At the close on Tuesday, the Chicago wheat futures market was up 5 cents per bushel for the week so far. KC Hard Red Winter (HRW) was up 3 and Minneapolis Hard Red Spring was down 4. After midnight and into the early AM session for Wednesday, all of the gains were given back plus a few cents, and Minneapolis was off another 6 cents. Directionally this market is hunting a narrow range and waiting for a leading factor to emerge.

     It’s month-end, so the funds that have built a large net short-sold position in all of the grains may move to close out some profitable positions Wednesday, which may be the only positive influence available for the moment. Multi-year lows, stable if not improving production wheat weather in the northern hemisphere and a stronger dollar…a recipe to promote caution in buyer’s minds.

     This is the time to stay on plan, making the incremental sales on schedule and trying to disregard “confirmation bias”, in this case the tendency to see only positives and avoid looking at negatives.  “How low is low?” is a question that is always answered after the fact. Meanwhile, the trend is weak and flat in some wheat markets and downright negative in others.  Stay tuned for further developments, even if it’s only a few minutes at a time!

     This wheat market is beginning to cause stress for some hard-working folks; market observers and commentators. Standup comedians or glib politicians they are not, but the audience expects fresh, intelligent and entertaining content every day, and lately there has been only the scrapings of the empty barrel to power this ongoing effort to edify and amuse readers. It also does not help when the price is consistently flat or negative for weeks or months on end. This is historical fact: most of the time, the market is not really doing much of anything. The problem is that when the market does act, it is worth money to know it is on the move. This requires vigilance all the time, even when it is dull. For a marketer of wheat, knowing when things change takes only a few minutes each day, but the market reporter is charged with maintaining a constant state of alertness to make that rapid scan possible. Have pity on the poor fools. Buy ‘em a sandwich and tell them what works for you. They will respond!

MarketBullets® Tuesday, January 30, 2024: Early AM

     Argentina is preparing to vigorously export wheat once again, after a decades-long pause. The only problem is that their new conservative government is planning to fund itself by taxing those exports. This will be instructive to watch. Meanwhile China has smoothed the way for Argentinian wheat imports, a development of which U.S.-based exporters have taken a dim view.  

     Wheat importers have yet to be punished for buying hand-to-mouth. There is no salient reason to purchase aggressively ahead when the market has such a clear-cut downward bias. Why ration supplies in an environment of abundance?

     U.S. total wheat shipments to date have reached 10.99 million metric tonnes versus 13.2 million by the same date last year, a 16.7% lag.

     The U.S. Dollar Index has spent the month of January rising and has gained 2.3% month-to-date. This is an indirect price factor, but does affect wheat export volumes over time, as it makes U.S.-origin wheat that must be paid for in USD more expensive (less competitive).

     Farmers in France, the EU's biggest agricultural producer, say they are not being paid enough and are choked by excessive regulation on environmental protection. See Reuters article <here>.

Paris Milling Wheat has printed a new 2.4-year low on Monday. The negative trendline there is consistent and persistent. They are vulnerable to cheap Russian wheat available in their backyard.

     Corn and soybeans have both printed vigorous new lows in the last few sessions.

     This trading environment is conducive to capitulation, an infamous condition under which cash sellers become resigned to selling at undesirable prices (usually occurring at long-term lows). There is no guarantee that if a low is identified a rally will ensue. It may take quite a while for prices to bounce to any significant amount. Holding cash in the bin is an expensive way to speculate when compared to well-known strategies that allow at least a partially open upside while establishing coverage against continued downside risk. If you are uncomfortable with the ongoing downward stress, call your merchant for perspective on alternatives. If nothing else you will know the short-term path ahead in greater detail.

     The trend is sideways to negative. There is no buy signal known as “because its cheap”. Lets be deliberate in action and thoughtful in reaction.

 It’s trackable. Let’s track it! Stay tuned. 

MarketBullets® Monday, January 29, 2024: Early AM

Cents USD per bushel (As of the week just ended on January 26, 2024). Figures are approximate.

Market   _                 __Last Week          MTD      

Chicago SRW:                  +7                  -27

PNW SWW Mar’24:           -5                   -20  

KC HRW:                        +19                  -16

MPLS HRS:                       +7                  -19

Paris Milling:                   -9                   -23  

Corn                              +1                    -24

Soybeans                       -5                     -83

     After midnight trade Monday shows a weak market, with Chicago down 8 cents, KC off 12, and Minneapolis down 7. We are now nearly back to last week’s lows, still inside of the range that has contained the wheat prices for many weeks.

     Old crop Hard Red Winter (HRW) and Hard Red Spring (HRS) are moving towards “inverted” configurations with nearby deliveries paying more than later time periods or new crop. There is still quite a bit of unsold wheat in storage around the country, but markets have dropped enough to slow country movement considerably, forcing end-users or exporters to pay a little more to fill obligations. On the back side, improving growing conditions are causing new crop bids to lag, as later supplies are shaping toward an expansion of wheat available. This behavior is a background factor often associated with upward-biased trends, but it is all we have to cling to at the moment.

     The only futures market with any positive look at all is Chicago, and that is within a long-term negative channel, but even with this generally uninspiring aggregate, the wheat markets are mostly lower-to-sideways, having achieved only small declines over the last  four months. The normal seasonal lows are over-due, and the price of wheat has dropped enough to suppress production (acreage declines in wide areas). There is no looming supply problem from weather or government policies. The market lacks a positive mandate to move toward price allocation of supplies…it’s a buyer’s market. The wheat price will rally from some future low point. It always does. But it could take a while to play out.

      So what are reasonable strategies for a wheat producer who must work at liquidation every year? In the long run it is watching trendlines and trying to be patient if wheat is moving upward and impatient if it is moving downward, incremental sales all around the calendar on a set schedule that can be modified according to defined parameters, like a positive or negative trend determination, and working with an array of price management tools, as in Hedge To Arrive (HTA) or other option-based programs that allow flexibility.

     The most basic of perspectives is to know the trend. It only takes a few minutes a day of observation to know when changes are afoot. If you know what you want to do before those events emerge, then it becomes a much simpler problem.

This stuff is trackable. There is no magic. Let’s track it!

MarketBullets® Friday, January 26, 2024: Early AM    

Wheat futures eased into the Friday session after midnight with a timid tone. Chicago front month contracts were down about 4-5 cents, just enough to put the brakes on the upward challenge of the intermediate resistance level between $6.17 and $6.21 in Soft Red Winter (SRW). KC Hard Red Winter (HRW) a bit stronger, at minus 1½-cents, while Minneapolis Hard Red Spring (HRS) was in-between at minus 2-3.

     Some of the wheat price dullness is coming from weak corn and soybean patterns. Wheat may diverge from the sister grains, but each of the trio rarely moves very far or very long from the other two.

     All-wheat exports are still lagging last  year’s sales pace by 10%, although there has been some improvement over the last couple of weeks.   

     The KC/Chicago spread has seen KC lose 77 cents of its premium over Chicago since last September, as the battle in global markets has been fought between Russian milling wheat, Paris and KC, with KC struggling to compete, while Chicago has benefitted from a string of Chinese buys. PNW white wheat has been following the futures crowd with lows around January 16 and a recovery of about 20 cents into current levels and an uptick of buying and rumors of buying in the last week. The all-wheat big picture trend is still negative, but the last 10 trading days has allowed some air back into the wheat price tires.

     There is a mild whiff of potential gains in the air, just enough to prevent capitulation on down days. Chicago is still the most followed market in the world, and it is parked right on top of the 81-session, positive-sloped mean line.         

     Global crop regions with current crops suffering drought or moisture excessive enough to shift grain balance sheets have declined in size and number, and those that had been dry in the southern hemisphere are recovering. At this point weather does not seem to have the price-driving power to move the wheat market upward. As the spring emergence season looms in the northern hemisphere there is always crop condition risk, but currently this does not read as a major probability.

     Wheat is pushing into the weekend without a mandate. The newswires are in standby mode and “There’s hamburger all over the highway in Mystic Connecticut” (Firesign Theatre, 1970).

Its trackable…Lets track it!

MarketBullets® Thursday, January 25, 2024: Early AM

     The Ukrainians continue. Never underestimate a Ukrainian. Bloomberg article <here>.

     The wheat market in the wee hours of Thursday is up a few cents trading quietly. It has regained a mild upward tilt and is once again challenging previous price zones that discovered selling pressure. Chicago March futures are trading about 40 cents above the lows printed six sessions ago on January 18. The weekly trend channel remains negative to flat. Chicago is presently the wheat market leader. Paris Milling Wheat is in a weak pattern, trading under its 129-session mean line.

     Iran appears to be doing its best to inflame the entire Middle East by proxy, and even some direct actions. Medical supplies and food are due to be distributed in Gaza, where hospitals are out of anesthetics and other key supplies.

     Stay tuned

MarketBullets® Wednesday, January 24, 2024: Close

     Wheat is going to be re-appearing in ag headlines as it is attempting to break out to the upside. One very small clue was a jump in trade volume in Chicago March contracts in the last 30 minutes of Wednesday’s trade session. Normally of late, these little volume spikes have been occurring in the First 30 minutes.  This is just a minor blip to notice that suggests a change in decision making has occurred among some buyers…Funds, Commercials…? Just a little puff of breeze.

     Russian crude oil has jumped in price, apparently due to a couple of drone strikes in a Leningrad, Russia regional oil facility. No major damage (so far), but this is a precedent. A week ago, Russian Urals crude was trading at about $17-$18 per barrel below Brent, the North Sea origin benchmark contract. The last couple of trade sessions have seen Urals now about $9 below Brent (See Crude oil chart <here>). Russia has been very aggressive in pricing their crude as well as their wheat into global markets in recent months, capturing a significant market-share in a wider band of business outside of their traditional buyers despite sanctions.

     This may be viewed as a little peep into the future for competitive global trade in food and energy, two of Putin’s most influential weapons. BTW, Ukraine is the 11th largest uranium producer in the world…just sayin’.

     Wheat is working on some technical patterns that look positive in the making. The trend channel is still negative, but this is a good time to be paying attention, as the nearby futures in Chicago have moved back above the 60-session moving average, a Box-o-Rox signal to “delay or hold incremental sales” (Not a speculative-style signal, just a “slow walk” on planned sales of physical wheat.  Call us for more information about this crude, but effective indicator.

MarketBullets® Wednesday, January 24, 2024: Early AM

     Chicago has begun to show a potential pattern of upward reversal, with a (maybe) higher weekly low last week at $5.73 in the front futures month than the previous low from the first week of December at $5.27. Now we need to see a higher weekly high, at or above $6.50. KC Hard Red Winter (HRW) is not displaying this potential, as the recent low last week was the lowest it has traded since mid-July of 2021. Minneapolis Hard Red Spring (HRS) is also not participating in this pattern, nor is Paris Milling Wheat, so Chicago is a possible leader, or maybe a mis-leader… At least we have a whiff of change from relentless selling.

     It seems like maybe we will have to rely on our good friends in the managed money sector to provide buyers, tapping some relatively big net short-sold aggregated positions. They have no trigger at the moment. There are profitable positions on the books, so month-end may produce some buyer energy.

     This may be just a case of “seller exhaustion” along with buyers just plain tired of being beat up.

     Expectations for slightly smaller U.S. spring wheat acres to be planted are emerging, with one agency, “S&P Global” estimating 100,000 acres less than last year. Canadian acres projected to be smaller as well, but in both cases, early ideas of yields are anticipated to improve more than enough to overcome the change.

     The wheat and other grain markets are stabilizing a bit after an exhausting couple of weeks. The trendlines for wheat are tilted slightly lower, as evidenced by new long-term lows printed last week in all but Chicago. Market tone is quiet. Marketing wheat in this kind of environment is somewhat unexciting, with incremental sales executed without urgency. There is a defined range that provides some guidance…hold and sell a failure of the lows can make some sense. Its best to write out any reasons to deviate from planned sales.

     Stay tuned! Its trackable. Let’s track it!    

     MarketBullets® Tuesday, January 23, 2024: Early AM

     Chicago wheat has seen impulsive behavior on downward sessions followed by grinding steps back upward, a pattern favoring the downside. The technical power is still on the negative side, although the most recent 4 trading sessions have produced a 15-cent improvement from the low on last Wednesday back up to January 16 levels. It is hard work for that amount, but it did validate the 78.6% retracement level of the move down from December 6, which was a low-energy pattern with a flat to mild negative slope, a sign of a market approaching “fair value”.

     The market is uneasy about the steadily widening war in the Middle East. Ukraine and Russia are not close to any political solution, as it seems that Putin is confident that he can win domination of Ukraine by simply hanging onto a “slowly bleed the opposition to death” strategy…no need for dramatic advances, just wear them down (no matter the cost). The nearby effect on the global wheat market is price-positive, and the long-term effect of resolution, no matter who prevails, is price-negative, as all of the acres in Ukraine will be back in production without barriers to selling into a global market and the sellers will be highly motivated.

     For now, the wheat price trend is nearly flat, with a slight negative slope. It is the chart base for any significant move upward under construction. Its time frame for completion is likely to be in proportion to the historical upward and downward moves of the last three years, as will be the potential upward retracements that emerge in response. It will test the marketer’s patience and skill.   

     The lack of hard-driving factors in the environment allows a quiet period before the spring dormancy break in the northern hemisphere, but for the sake of good marketing, it is valuable to track the trend so as to catch the shift into a higher momentum market when it arrives. No worries, it will come and it will be trackable. Stay tuned.

     PS there is an interesting ETF called “WEAT”. Take a look at it Here.

Stay tuned. This stuff is trackable! Let’s track it!   

MarketBullets® Monday, January 22, 2024: Early AM

Wheat Market *   ___Last Week           MTD  

Chicago SRW:                      -3                  -35  (-5%)

PNW SWW Mar’24:          Unch             -20  (-3%)

KC HRW:                             -10                  -35   (-5%)

MPLS HRS:                           -3                  -27   (-4%)

Paris Milling:                       -6                  -13   (-2%) 

Corn                                    -3                  -25   (5%)

Soybeans                           -12                 -78  (-6%)

*Cents USD per bushel (As of the holiday-shortened week just ended on January 19). Figures are approximate.

This Chicago Soft Red Winter (SRW) wheat futures market is working hard to set up a base at the ratio-retracement support level at $5.73-$5.76 for the front month contract. Very early trade Monday was slightly lower, making it about 15 cents above the support level. It is a thin reed to lean upon, since we have seen this market sinking through every previous price that had revealed buyer interest in the recent past. The risk on the downside will expand if the market cannot hold above the price range.

On the positive side, if the contract can sustain the very short-term upward move (based on market confusion, currency value changes or continued expansion of Red Sea-Suez limitations on bulk shipping, the upside target range is about $6.39-$6.49, or about 50-60 cents above early Monday trade levels, followed by an attempt above that into the $7.00 level, but that is a stretch without some fundamental support.

The trend since December 6 is still negative.    

The Suez Canal between the Mediterranean Sea and the Red Sea is one of the strategically valuable “Choke Points” for international shipping. Another key passage is the Turkish Straits between the Black Sea and the Mediterranean by which large numbers of vessels pass with bulk and container cargoes into Asia, Australia and India. The alternative routes are much longer and more expensive. Presently bulk cargoes of wheat have not been dramatically affected, but the trend in the Middle East conflict(s) is still to grow wider and more diversified. The Russian invasion of Ukraine has taken a lower position in the news flow for the moment, and it seems that Ukraine is going to continue to export as much wheat as they can while they can.

There has been an uptick in U.S. export sales numbers in recent weeks, but it remains to be proven that this is a reflection of market pressures or just normal demand in the season. China remains a buyer of wheat for this period, which has already supported the U.S. price markets and may do so again, although perhaps not as vigorously as the first series of buys in late November thru early December. Total U.S. wheat exports are at the lowest we have seen since 1971-72. The world has wheat coming from all directions.

PARIS, Jan 17 (Reuters) Among the 12 wheat cargoes that have left France for China since last month, five travelled through the Suez Canal and Red Sea, while seven chose the longer route around Africa, including two that had turned back in the Mediterranean, LSEG shipping data showed.

FranceAgriMer in a supply and demand outlook slightly lowered its forecast for French soft wheat exports outside the European Union in 2023/24 citing lower demand from China and Black Sea competition in Egypt.

MarketBullets® Friday, January 19, 2024: Early AM

     New long-term lows for wheat are still being printed every week. The U.S. Dollar Index has recovered nearly all of December’s decline, making U.S.-origin goods more expensive in an inflation-weary world. The world is also uneasy about the trend toward wider and more committed war in the Middle East, as we see the traditional fractures among the Muslim countries emerging from the heat of the tragedy in Israel and Palestine. Global trade is being stressed, as the Red Sea and potentially the Persian Gulf “Choke Points” are vulnerable, threatening the flow of crude oil and other essential trade. Markets do not like instability, usually responding negatively.

     The negative trend in wheat is not yet completed, but at this point the risk for buyers has been reduced substantially. The change to a positive slope will emerge, and it will be visible on the charts. The challenge of deducing the future price amidst the “wars and rumors of wars” is always stiff, but this is not the first time we have seen such pressure on world markets. It is absolutely essential in this environment to track the market and reduce exposure to price risk in any way available. Waiting for a rally is not a strategy, it is a high-risk position. One only has to study the last 3-4 years to see what can be missed by holding too long. Call your merchant and lay out a plan for new crop sales, as well as old crop clearance. There are ways to cover risk without forfeiting potential.

     Stay tuned. This stuff is trackable! Let’s track it!    

MarketBullets® Wednesday, January 17, 2024: Early AM

     Andre Sizov, in “The Sizov Report”, writes: “The competitiveness of Russian wheat compared to European suppliers has diminished. SovEcon estimated the price of Russian wheat with 12.5% protein at $244.5/MT FOB at the end of last week, while French 11% wheat was offered at $243/MT, $1.5 less. Two months ago, Russian wheat was $18 cheaper than European wheat.”

     Is that good news? It depends on what you want to see. For wheat sellers, it is not great. Lower global prices, although eventually stimulating to demand, are reflected quickly in cash bids across the country. For those who recognize that Ukraine’s ultimate success or demise will lead to more wheat entering the world markets that what is coming today. That is a long-term price negative. For leaders who must feed their populations to prevent dangerous food riots and potential political revolution, it is great news. A successful “Special Operation” in Ukraine makes Putin potentially a great ally for importing nations through the use of this “Food Weapon”. This is also true of energy supplies, but that is a story for another day.

     The wheat market is steadily bleeding into very long-term price lows. In the very early Wednesday AM trade, Chicago wheat was trading quietly, within the bottom trade range of Tuesday’s negative 14-cent session. If applied to front-month charts, the price has tapped the 78.6% retracement level and hesitates to break lower on Wednesday morning. This is a very short-term view, not useful for marketing, but fascinating as part of the study of market trends. The market is portraying profound weakness, with new multi-year lows in Paris Milling Wheat futures showing why Russian sales have slowed. U.S. cash bids have spiraled into a movement-killing low range. This is a setup for a bounce, but a short-term rally is only good for part of the marketing effort. Longer-term it will be weather and global political/economic stability that allows more wheat to be purchased and eaten.

     Holding wheat in the bin has cost many producers lots of money in the last year. A prudent sales effort is at least partly based on incremental sales and deliberate attention to the footprint of the beast we pursue…the price charts. Chicago wheat is below the “Box-o-Rox” indicator (60-session moving average) which triggers a “maintain or accelerate incremental sales” signal. Simple? Yes. Can be improved? Yes.

     The trend is near a technical tipping point, under which there is room for more downside. Somewhere along the line will come a recovery. We have to wait and see it emerge. Capitulation is when the majority lose hope of higher prices and resignedly sell without regard to indicators, smart-ass commentators, or what the 8-ball says. That can be avoided with a little study. Stay tuned. Track it!    

MarketBullets® Tuesday, January 16, 2024: Early AM

      On Friday, front-month Chicago March Soft Red Winter (SRW) wheat futures settled down 7¾ for the day after bouncing a dime off of some new lows dating back to November 30 of 2023. KC Hard Red Winter (HRW) wheat futures were relatively stronger, up 2 cents in nearby delivery contracts, while Minneapolis Hard Red Spring (HRS) wheat futures were near unchanged, down ¾-cent. Monday saw Paris Milling Wheat futures were open and trading down to lows not seen since July of 2021.

     Corn and Soybeans both were negative leaders on Friday, with corn front-month contracts down 9 cents and beans down a dime, both hitting sharp new 3-year lows.  

     Tuesday very early trade has Chicago started with a pop, up a nickel, but faded to unch by 3:30 AM Pacific Time. KC and Minneapolis followed similar patterns. The new week opens with a pair of fives, on a minimum bet.

     Some of the behavior of wheat futures was in sympathy with corn, which received a market-beating on a minus 9 cents and a session low dating back 3 years to late December of 2020. Soybeans are also in a negative slope, thumping down to a low Friday that is part of a series of lows dating back to June of 2023. A collapsing corn and soybean market is a drag factor on wheat, helping keep a damper on price rallies, beyond the usual technical boundaries. For marketing it’s a bit unreliable as a timing tool and serves better as a background factor.

     As negatively as Chicago wheat behaved on Friday, the USDA reports were not as sour as might be assumed given market behavior, and were the only grain in the report to actually show some mildly positive numbers. U.S. All-Wheat Domestic carryout for this marketing year was reported at .648 billion bushels, versus the average pre-report trade guess at .658 bil, not a price-negative number. Global all-wheat carryout came out at 260 million metric tonnes, versus a pre-report average idea of 258 million tonnes, a mildly negative non-surprise. U.S. All wheat Stocks in inventory showed 1.41 billion bushels versus an average 1.387 guess, not a big miss.

     Winter wheat seeded acres were pegged at 34.425 million acres, below the average pre-report estimate of 35.786 million and below the low end of the range of guesses.

     Overall, the wheat price reaction to the report suggests little fundamental price damage, but no inspiration either.  

     The winter weather should not be a surprise to the market, and much of the wheat did catch a little snow ahead of the cold winds. The market may want to add some risk premium, but on balance, moisture is more important no matter how it arrives. This looks like a mild, short-term positive with less than dramatic effects on the wheat price longer-term.  

     Many times, USDA reports are not immediate price drivers, but function as a “brake-release” as they are always potential triggers, but once they become public the threat of surprise is removed and the trade moves on very quickly. Within a few days, this report will be completely absorbed and forgotten.

     The wheat price trend emerged from the formidable January USDA data dump with no urgency, still clinging to a slender positive tilt almost entirely due to a series of Chinese SRW purchases in the first half of December. If there is no support from winterkill reports or war-related supply chain problems, this market is suggesting more flabby behavior, at least in the nearby.

     BTW, in the PNW, there are about 210,264,000 bushels of stored wheat (all varieties) still sitting in the bin. Prices since the first week of August have declined about 50 cents for white wheat. Without calculating what proportion of those stored bushels are white wheat, it is still distressing to see a $105 million price loss for the region. Lets see about tracking the market a little more vigorously and reduce exposure in negative markets, eh?

     This stuff is trackable! Lets track it!   

MarketBullets® Friday, January 12, 2024: Early AM

     USDA Report Day Friday 9:00 AM Pacific Time, 11:00 AM Central. Until that is released there is not likely to be large volume of trade or price movement. “The trade” means all of the market participants at any given time.

     The price we see on our computer screens is generated by aggregating thousands of real money decisions to buy or sell, moment by moment, through the trade session. All this data is gathered in real-time and blasted out into the world by an electronic system of marvelous complexity, yet the conceptual core of the driving flow is reliable and honest due to its simplicity. Each trade posted represents one buyer and one seller. If more buyers press bids than there are sellers to match with offers, the price rises until it is attractive to enough sellers to balance the demand with supply. If there are more sellers than buyers then offers fade lower until the price is low enough for buyers to take action. In time, the process yields thousands of price-dots, each an identical agreement for physical delivery and acceptance, which become a moving, printable river of very public data. The thing has not fundamentally changed since its inception because it is elemental, irreducible, atomic. Buy or sell, transparent and available to anyone interested, whether that is a farmer with a binful of grain that he must sell, a chicken feeder who requires a reliable source and fair price for feed, or an international trading company wishing to reduce the risk of product price fluctuation upon having made a commitment to load a vessel or receive one in the future. The perceptive speculator finds a vital role, adding fluency and liquidity to a market that would become sluggish and difficult to trade if only those whose interests are physical were engaged. There is always a willing buyer or seller available at need, and the price is always public.

     The futures market is large and transparent, difficult to consistently manipulate. For example, if a very large buyer quickly bids the price up aggressively over a short period to acquire a dominant position of ownership, the problem of liquidation of that position is such that the price will fade back to near its original position in the process, rendering whatever profit was achieved essentially null.

     For all of its power and simplicity, the futures market is not perfect, and must be protected to preserve its value of trustworthiness. Strict rules of operation are zealously applied by a self-governing group of traders and watchdogs. The government has only a secondary agency in the careful maintenance of market integrity. All participants and beneficiaries of the futures markets are aware that in order for any value to be preserved, there must be rigorous observation of its rules. Offenders are quickly fined, escorted out of the business and banished.

     There are many trading markets across the globe, but the futures markets remain the most honest in their purpose and product.

     The wheat market Thursday is holding steady, awaiting the USDA data to release on Friday morning at 9:00 Pacific, 11:00 Central.

     The outside markets are paying more attention to the war(s) in Ukraine and Israel. There is a creeping gloom, higher fuel prices and a sense of a potentially very expensive period ahead.

     The winter has finally arrived. Midwestern wheat producers are seeing snow cover their acres with relief. Wheat in the PNW that had been only partially dormant is about to be tested by some very cold wind. PNW white wheat prices have been relatively dormant in recent weeks, moving very slowly in response to the whipsaw movement in the red wheats.

     The trend in wheat prices overall is sideways in a long enough base to stage a move. The market will be watching the USDA reports very intensely for a potential ignition of a new move.                       

     IGC raised its 2023-24 world wheat production estimate by 2 million metric tonnes to 787 million. Ukraine, Russia and Turkey all saw increases in expected production, but that is still down 2.1% from last year’s crop.

     After the reports Friday, there will be commentary aplenty.

MarketBullets® Wednesday, January 10, 2024: Early AM

The market wants to wait until the “Big Data Dump” on Friday morning, in the hopes that we will receive reason to trade, long or short. The violent price reactions to USDA reports is sometimes due only to the intense scrutiny of the anticipated figures. Once released, it is a scramble among traders to discern the proper positions to be entering (or departing from). Sometimes the whole session is wrapped up in a kind of tsunami-of-statistics effect. It is fascinating, but not actually tradeable for any normal person. Once the dust settles, then the real decision-making begins.

     The wheat price trend is nearly flat. China gave Chicago wheat a little boost for most of November into the first week of December, which in turn led to a shift among large speculative accounts in which they reduced their short-sold positions by about half. There was no big fundamental shift, but most of the wheat markets; HRW, HRS, SWW, and SRW managed to change their relentless downward momentum that had been running prices down from July to November of 2023.

     Now we are in a slightly different pattern, with almost no trend bias. Enough wheat is moving to fulfill most global buyer requirements. There is enough global supply to continue this pattern until the northern hemisphere crop becomes more visible over the next 30-90 days.

     Many global wheat buyers are very shallow in coverage ahead, as they have been rewarded for being slow to buy for many months. The funds are still short-sold, just not historically massive. There is still accumulated buying energy in both of these categories of trader’s positions, should the market startle them awake. It is still a long way to the bin from here in the northern hemisphere.  

     The Chicago front month futures contract is above its 60-day moving average, an arbitrary line in the sand. As long as that configuration is intact, there is little price threat to wheat in storage, although higher interest rates and other rising costs will keep upward pressure on the real cost of storage (not just the fees charged). The downside risk is less than it was this time last year, or anytime last year for that matter. It still makes sense to be prepared to sell incrementally on any given rally or just on plan schedule. Call your merchant. Ask about price floor strategies. Options are cheaper than they were just a short while ago.

     Stay tuned. Keep an eye on the charts. Don’t worry about Friday’s reports and their effects. If a trend emerges it will be trackable. Lets track it!       

MarketBullets® Monday, January 8, 2024: Close – into Tuesday early AM trade:

Mar 24 CBOT Wheat  closed at $5.96 1/4, down 19 3/4 cents.

Mar 24 KCBT Wheat  closed at $6.15 1/4, down 12 3/4 cent.

Mar 24 MGEX Wheat  closed at $7.02 1/2, down 9 1/2 cents.

     Post-midnight trade on Tuesday had Chicago Soft Red Winter (SRW), KC Hard Red Winter (HRW) and Minneapolis Hard Red Spring (HRS) all up 5 cents, trading in the lower half of Monday’s range.

     We are trading without conviction in a market that has no compelling reason to ration wheat supplies via much higher prices. The forces that are allowing a very slight upward bias are collectively just enough to keep would-be speculative sellers mostly on the sidelines. Winter wheat production weather has been relatively mild this season, but a cold session is about to push through the northern hemisphere. Winter wheat has repeatedly proven to be winter-tougher than the trade guesses at least over the last 40 years or so (Winston used to say, “This is the 70th year in a row of unusual weather.”), but it is moisture that is the key, and that is better this year for most of the U.S. production areas, even though not as good as some might have hoped. Thus, we have only a thin edge to trade. The only way to judge this kind of market is with patience and a calculator. Interest rates are creeping higher (Storage costs), and other costs of operation are still rising, so there is a bit of a squeeze, leaving little room for casual guessing. The trend is still permitting a slower rate of cash sales for the moment, but that could end quickly. The charts will show changes before the news headlines.                                     

     Pre-report trade survey guesstimates show average expectation for U.S. wheat carryout to be reduced to 658.7 million bushels, with a range from minus 29 million (tighter) to plus 22 million (looser) than last month’s figure. 

     Export Inspections for the week ended Jan 4, 2024 showed U.S. wheat loaded year-to-date totalled 10.132 million metric tonnes, a better week, but still 16% behind last year’s pace.

     This stuff is trackable. Lets track it!

   MarketBullets® Friday, January 5, 2024: End of Week Update:

For the first week of the New Year 2024 (a four-day trading week):

Wheat Market   _______WTD           MTD   Cents USD per bushel

Chicago SRW:                      -11               -11

PNW SWW Mar’24:          -20               -20

KC HRW:                              -15               -15

MPLS HRS:                           -11¼            -11¼    

Paris Milling:                       -3                  -3    

     Cold weather in forecast for HRW country and most of the northern hemisphere wheat production areas. Winter?

     Rumors of Chinese interest in U.S. wheat (probably SRW).

     Slightly stronger U.S. Dollar Index

     Trend continues toward expansion of Israeli-Hamas conflict into regional problems (overall global wheat prices are less affected by Red Sea shipping access).

     The now-accomplished retracement of July high - November low range makes next upside target zone between $6.48 to $7.05 for front-month Chicago March futures; about 30 to 80 cents higher than today’s settlement. On the downside, A failure to discover buyers at $5.90 will open the way for a return to late November lows around $5.56. This is a “meatgrinder market” unless significant new fundamental factors emerge, which will take time to show. We are range-bound until then, with a slight upward trend.

     Lots of street talk about the “Financial Bubble” being fragile. Large commercial office real estate in urban locations is vulnerable and already represents some bank exposure. Multi-family investors are faced with refinancing original debt to the tune of about a trillion dollars in coming years. Bank exposure can trigger wider problems. The market is assessing these and other interest rate exposures now.

     Major USDA data coming out this week on Friday January 12, 9:00 AM Pacific Time, 11:00 Central. This is one of the reports that have a regular chance of moving the market.

     Wheat prices are trending mildly higher without major fundamental movers at present. Funds have reduced their short-sold exposure enough that there is not a powder keg under this market…maybe just an M80…

     Stay tuned.          

MarketBullets® Friday, January 5, 2024: Early AM:

     Chicago settled Wednesday at the psych price of $6.00, Just a wee bit below the (arbitrary) 60-session moving average price that is our chosen boundary between uptrend and down. On Thursday, the March contract ranged the 38.2% and 61.8% ratio retracements as if pre-set to do so. If that is validated in the coming sessions, the downward move from the high of December 6th may be declared completed, with a resumed upward trend definition. This is potentially a nice little illustration of the Fibonacci principle, although it is extremely short-term in nature, with only marginal value in decision-making for the marketing of wheat. The most this pattern can do for us is to assist with timing an already determined sale or validating an already established uptrend.

     The closing settlement on Thursday was the second session with a close above the 60-day moving average, leaving only one close below that indicator on Wednesday, suggesting some positive price energy for wheat.

     Buenos Aires Grains Exchange (Bage) reports: “After a week-on-week progress of 12.8 percentage points, 83.7% of the suitable area was harvested. An interannual delay of -15.8 percentage points is maintained. The average yield amounts to 26.5 Quintals/Hectare (about 20 bushels/acre). The new production projection is 15.1 Million metric Tonnes.” Upon election of a conservative government, Argentina has devalued their currency  in an effort to cool off their raging inflation of 121.6% in 2023. They are likely to be much more aggressive in wheat exports than recent years, and they are capable of being a global player in wheat pricing.

     U.S. domestic wheat production conditions are slowly improving with better moisture in major wheat production areas, with ratings up in TX, OK, KS and SD. Drought conditions do not disappear quickly from the map, but the moisture trend is positive.   

     The present fundamental of plentiful supplies of wheat for sale will have the tendency to limit strong rallies in global wheat prices into the northern hemisphere spring weather markets season, which begins on dormancy break in the southern tier of wheat states in late February to early March. It’s awfully hard to kill Hard Red Winter (HRW) wheat with cold, but every year it’s a concern, especially when there is short moisture. Until this becomes a daily coffee talk subject, this market will be hunting for reasons to trend much higher.   

     The wheat price trend is nominally higher, led by Chicago, but you have to squint your eyes a little to see it. Paris is not helping, with its confirmed downtrend intact. Russia is not going to run out of wheat to sell this year, and they are highly motivated to move the stuff. It makes sense to be patient when the chart is tilted upward, but if it reverses, we will have to take it seriously. PNW Soft White Winter (SWW) wheat demand is steady, but not inspiring. Storing wheat is not an efficient way to speculate. Call your merchant and talk about price floor strategies during rallies. Stay tuned.  

MarketBullets® Wednesday, January 3, 2024: Early AM:

Here comes 2024! It’s time to refocus marketing energy. The wheat market, as represented by Chicago futures contract prices is in a very mild upward tilt, a weak trend that is still very vulnerable to declines below key price levels that would obliviate the young upward sprout. Marketing in this environment is similar to working in a regular downtrend; accelerating scheduled transactions when the slope is negative, at least staying on incremental sales schedules and slowing or suspending sales when the trend is positive (by our definition, or your own definition, as long as it is consistent).

If we can assist in identifying trends and trend changes, your investment as a subscriber is rewarded. This stuff is trackable. Let’s track it!

The first trading day of the new year gave us a 21-cent downward shot in Chicago front-month trade. This put the price back to the same level as December 13th, 15 sessions back, and itself the lowest trade price since December 4th. The current trend was not affected, which just means that about half of the gains provided by a series of Chinese purchases of Soft Red Winter (SRW-Chicago) have been returned to the abyss, leaving us in a sideways pattern with an ominous lower high, 10-cents below the highs of December 6. The patterns followed by the other wheat markets were roughly the same, but attenuated.

The next question that must be attended is whether wheat will slide back below the $6.00 level, which if realized will result in the *“Box-o’-Rox” signaling “resume and/or increase incremental sales” (both old crop and new). At which we would start over like we do, in the quest for a new “Base” from which a new uptrend may be born. This may take us well past emergence from dormancy into the spring weather markets before we will have a definable favorable trend. This is not an easy market!

2023 ended up with a $2.00 per bushel decline in PNW Soft White Wheat from the first week of January 2022 at $8.55, down to $6.55 today. Chicago surrendered “only” $1.65 thanks to China. KC Hard Red Winter (HRW) lost $2.64, and Minneapolis Hard Red Spring (HRS) is $2.23 below this time last year. Paris Milling wheat futures are down €88 per metric tonne for the year (about $2.41 per bushel).

Is 2024 bound to be a better year for wheat prices? If by that you mean more positive-sloped, probably yes. If you mean a better absolute pricing opportunity, then probably no. The highs for the year are bound to be lower than last year’s stellar peak (if that rare Black Swan fails to return to the pond once again). The pressure on marketing plans is sure to be higher, as the market is likely to be volatile and sometimes nasty in a war, election, harsh-weather year.

All things will be known in the future. There are no problems that cannot be answered with study. The present wheat market pattern is at least somewhat in a positive slope.  Stay tuned to this channel for the next chapter in the saga.

This stuff is trackable. We track it.  

MarketBullets® Thursday, December 28, 2023: Close:

Chicago front-month futures (March) bounced off of the centerline of the last 18-days of trade. Closed within the range of the last two sessions.

Next batch of USDA reports to be released Friday, January 12, 9:00 AM Pacific, 11:00 AM Central. Lots of data, multiple reports.

Egypt and other importers are working on the March shipment time frame, still considered “hand-to-mouth”.

Wheat price trend remains steady; sideways with slight upward bias.

It is not required to stress about wheat prices, but it seems a good idea to check-in frequently. Stay on this channel.