Rising Stocks Add To Wheat?s Woes
Today’s Spotlight Market
Wheat futures continue to find themselves under heavy selling pressure after the USDA reported that supplies of the grain were larger than previously forecast.? In addition to swelling world supplies of Wheat, outside markets have piled on and added to price woes.? The USDA is expecting a record Corn yield of 167.5 bushels per acre this year compared to the agency?s prior forecast of 165.3 bushels per acre.? Corn stocks are expected to reach 15 year highs.? The agency also raised Soybean yield and supply forecasts.? This has dampened the hopes of Wheat bulls, who believed that lower prices could spur demand
Fundamentals
World Wheat inventories are expected to have reached 188.61 million metric tons by the end of May, topping the USDA?s prior estimate of 187.4 million bushels.?? The export market for Wheat has also become more competitive, which does not bode well for prices.? There is a slight delay to the winter harvest, which has kept domestic cash prices steady.? However, areas that have seen too much moisture are expected to be dryer for the remainder of June, which suggests the pace of harvesting should increase.? Russian analyst IKAR did cut their production forecast for 2014 to 93.5 million tons, down from 96 million last week.? The USDA expects world production of the grain to top 701.6 million metric tons, up from last month?s forecast of 697 million metric tons.? The demand side of the market has been very soft. Buyers are not exactly rushing to the market, given the recent decline in prices.? Rather, they are buying for current needs and hoping to buy more at lower prices in the future.
Technical Notes? -? View Today’s Chart
Turning to the continuation chart, we see the July Wheat contract falling sharply since early May.? Prices closed just above minor support in the 587.50 areas, but the real test for Wheat prices may be at 550.? Failure to hold the 550 mark could result in sellers coming in with greater fervor.? The RSI indicator is still showing extremely oversold conditions.? The indicator had actually posted near zero readings last week.? The oversold conditions could be seen as somewhat supportive in the near-term.
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