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Wheat Prices Stabilize


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Wheat Prices Stabilize

CURRENT STATE:

WHEAT:Wheat is now in a holding pattern. Which way from here is anyone’s guess? With still no real tangible news to change the fundamental picture of Wheat, a further move to the downside would not be surprising. There are upcoming USDA agency reports, however, these people are novices and, as such, their opinion should be totally ignored i.e. do your own homework. Weather conditions in Kansas and Oklahoma have resembled a goldilocks environment this summer i.e. not too hot, not too cold, just right. As for North and South Dakota, this area has seen some much needed rains over the past few weeks but this drought stricken area is more than offset by the enormous quantities of the stuff still waiting for processing. Some farms in the Midwest will and have seen as much as 75+ bushels an acre. On a more positive note, these yields are down from those in 2016. Having said that, wheat prices at present are still in a dire state and I don’t see any price improvement until we know the plantings. Watch this space!

As one would imagine from the aforementioned, both algorithms are pointing downward and should when considering the grand quantity of the crop. There is simply WAY too much of this commodity. I would simply blame it on technology and the higher efficiency rates it’s generating.

MORNING CALL and Recommendation:

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

POSITION:

Short: @KW (Hard Red Winter Wheat)

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

Current Price: 397.25 (8/28/2017, 10am CST)

PROFIT/LOSS:

+237.00 (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.royalhighlandadvisors.com orwww.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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