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Wheat Prices Looking for Direction


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Wheat Prices Looking for Direction

CURRENT STATE:

WHEAT:Wheat, as discuss last week, is still in a holding pattern with a slight upward bias. We’ve hit yearly lows as predicted would happen a month ago. The market is now looking for direction albeit I think a temporary bottom has been reached. Having said that, we could see some positive drift in the price of Wheat over the next several days, at least until some new and meaningful information comes to market. The really big problem is Hedge Funds continue to build on their bearish bets on Wheat with net long positions largely and increasingly negative. I’ve always been one of those to take the contrarian side on crowded trades; and this is exactly what’s befalling with Wheat. Which way from here is anyone’s guess? With still no real tangible news to change the fundamental picture of Wheat other than that from Canada i.e. their harvest of the higher protein brand was seen decreasing less than estimated, a further move to the downside I think at the moment is limited. In any event, even though wheat prices are still in dire straits, I’ve gone long the commodity on a day-to-day basis. Watch this space!

Both algorithms are pointing sympathetically upward and I’ll go with the trend at the moment. However, there is still WAY too much of this commodity just lying around, and this always spells Sell.

MORNING CALL and Recommendation:

We are Long @KW given both Algorithms point to the upside.

POSITION:

Long: @KW (Hard Red Winter Wheat)

Price: 426.25 (8/29/2017) (continuous contract; contract adjusted)

Current Price: 438.75 (9/4/2017, 10am CST)

PROFIT/LOSS:

+248.00 (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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