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Wheat Prices Tumble


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Wheat Prices Tumble

CURRENT STATE:

WHEAT:As mentioned in my previous commentary there is no justification for Wheat to be where it is pricewise given the state of the harvest and especially world supply and demand. Wheat this morning has breached the 410 level suggesting it has much further to drop. In fact, we could see a 350 handle on Wheat by the end of October if things playout accordingly. And, we really can’t beat up on a commodity any more than what sellers have done to Wheat over the past few weeks. This can be discouraging when considering the farmers hard work in trying to profit at something that’s so indispensably important to our daily diets. I simply attribute Wheat as well as all declines in other commodity prices to the advancements in technology, something similar to that of oil in which horizontal drilling has allowed shale oil to be mined and surface lifted today at prices inconceivable just two years ago. In short, there is no real tangible news to change the fundamental picture of Wheat and a further move to the downside would not be surprising.

As one would imagine from the aforementioned, both algorithms are pointing downward and should when considering the grand quantity of the crop in the Midwest. There is simply WAY too much of the commodity.

MORNING CALL and Recommendation:

We are short @KW given both Algorithms point to the downside. My short-term Wheat price target is in the 400 range.

POSITION:

Short: @KW (Hard Red Winter Wheat)

Price: 544.00 (7/12/2017) (continuous contract)

Current Price: 411.00 (8/21/2017, 7pm CST)

PROFIT/LOSS:

+223.00 (as of January 2nd, 2017; per 1 contract)

FULL DISCLOSURE: Short KW

For farmers/producers looking to put on a hedge please give me a call for a no obligation free quote. I’ll be more than willing to visit your farm and explain how a hedge works. For those interested in further information regarding other commodities I follow (including corn, soybeans, and lean hogs) please visit our website:www.agriskconsultants.comor call me at 920-319-1444 or email:phil@agriskconsultants.comorphillip.mcknight@bath.eduorphil.mcknight@alumni.ucla.edu.

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About the author


Phil McKnight has a Bachelors Degree in Accounting from the University of Arkansas (Fayetteville), a Masters in Business Administration from Northeastern University, a PostGrad Diploma in Personal Financial Planning from the University of California (Los Angles, UCLA), and a PhD in Finance from the University of Bath (England, UK). Phil graduated with distinction/summa cum laude from UCLA.

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