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World Wheat Supply Estimates Continue Upward


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World Wheat Supply Estimates Continue Upward

CURRENT STATE:

WHEAT:As I wrote last week Wheat prices continue to be restrained by the enormous oversupply brought about by years of over producing. The US Department of Agricultures WASDE supply and demand crop report paints a very negative picture on rising estimates of world supplies. How important is this report? Well, it only confirms what we already know about the swelling of both domestic and world supplies of this beautiful commodity. Moreover, the winter Wheat seeding is slightly ahead of pace in previous years. This coupled with average rains and temperatures in the upper and central US spell lower prices. As for Wheat futures, lets not jump to conclusions just yet given this is still early stages.

As a result of the aforementioned, I still predict estimated yields for next years crop will increase by at least a factor of 1.10 i.e. on US yields. Over the short-term I dont see Wheat prices moving anywhere anytime soon given the world is awash with the stuff and farmers continue to over produce. In my view the only catalyst that can tighten supplies would be to plant less and my channel checks indicate over the past couple of weeks suggests farmers are doing just the opposite.

In short, I still have a buy on Wheat, albeit a weak buy. In any event, even though wheat prices are still in dire straits, Im still long the commodity on a day-to-day basis but this could switch to sell at any time. Farmers, its not too late to lock in a hedging strategy for next years crop, so give me a call. I have a strategy that could benefit you.

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: 442.00 (10/16/2017, 9am CST)

PROFIT/LOSS:

+252.25 (as of January 2nd, 2017; per 1 contract)

FULL DISCLOSURE: Long KW

For farmers/producers looking to put on a hedge please give me a call for a no obligation free quote. Ill be more than willing to visit your farm and explain how a hedge works, obviously at not costs to you. Please visit our website: www.royalhighlandadvisors.comor call me at 920-319-1444. Email: phil@royalhighlandadvisors.com, phil@agriskconsultants.com, phillip.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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