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Wheat Prices Holding Steady, Corn Overpriced


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Wheat Prices Holding Steady, Corn Overpriced

CURRENT STATE:

WHEAT: Wheat prices have been subdued over the past few weeks with the market waiting on some
any news that will provide direction. I would refer this as a ship in the middle of the Atlantic without a rudder. If there's any good news over the past week was the fact that Wheat exports showed signs of life, yet nothing to get really excited about. Worldwide, Wheat acreage sowings are expected to be up and my estimates
for next year's yields i.e. 2018 have been adjusted accordingly. I'm still remaining somewhat bearish on this beautiful commodity's price heading into next year with a harvest factor of 1.10 domestically, when compared to this year's harvest.

CORN: Corn, at the moment, is simply an overpriced commodity. My prior channel checks suggest
that all silos are bulging from not this year's harvest but still from last year's harvest. When you factor in this year's crop, there is simply no where to put the kernels. Now factor in the latest USDA's WASDE crop report then you get a receipt for selling and, in turn, lower prices. In fact, to put in perspective, US Corn stocks haven't seen these sorts of levels since the mid 80's." Never catch a falling knife".

In summary, the markets are simply looking for direction and any clue to information that may, I repeat may, impact the price going forward. Whatever it reads will probably be short lived. My 2018 Wheat price estimate
still remains around the 360ish level. I have a cautious sell on Wheat. Farmers, it's not too late to lock in a hedging strategy for next year's 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: 447.25 (10/19/2017) (continuous contract; contract adjusted for November 2017))

Current Price: 442.25 (11/13/2017, 9am CST)


PROFIT/LOSS:

+251.75 (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.mckniight@bath.edu; phil.mckniight@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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