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Wheat Prices to Test 360 Level


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Wheat Prices to Test 360 Level

CURRENT STATE:

WHEAT:Wheat estimates continue to be revised upward in every region of the world. Just last week the Argentine agriculture ministry up its Wheat forecast for the region. This is a typical example of how bearish forecasts can create the perception of oversupply. The more recent US Department of Agricultures WASDE supply and demand crop report also painted a very negative picture. Adding further insult is that next years yields will increase by a factor of 1.10 domestically. If these forecasts come to fruition then the aspect of exporting the stuff to reduce its superfluity is clearly not an option. Performing my normal channel checks as to the potential sowings domestically, I believe that in 2018 there is a potential for a calamitous collapse in Wheat prices. Im, therefore, lowering my 2018 price estimate for Wheat to the 360 level. Simply put, Wheat prices will continue to be restrained by the enormous oversupply brought about by years of over producing, and the aforementioned bearish forecasts only make matters worse. In my view the only catalyst that can tighten supplies would be to plant less and my channel checks suggest farmers are doing just the opposite.

In any event, I have a sell on Wheat, albeit a weak sell. 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 Short @KW given both Algorithms point to the upside.

POSITION:

Short: @KW (Hard Red Winter Wheat)

Price: 434.25 (10/19/2017) (continuous contract; contract adjusted)

Current Price: 430.25 (10/23/2017, 9am CST)

PROFIT/LOSS:

+247.25 (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. 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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