Winter Wheat Off To A Rough Start On Dryness Concerns
Today’s Spotlight Market
The U.S. is not alone in seeing its Winter Wheat crop get off to a rough start this season. Reports out of the Black Sea region, which includes the grain growing regions of Russia and Ukraine, are that cold and dry conditions are not only slowing the pace of seeding, but also delaying the emergence of the newly planted crops. Conditions are better in Western Europe, where Wheat plantings are on pace in both France and the U.K.?
Fundamentals
With the U.S. Corn and Soybean harvests nearly complete, grain traders are starting to turn some focus to the Winter Wheat crop. which so far is off to a shaky start. The USDA reported that only 47% of the crop was rated good to excellent, which is 8% below analysts? estimates. Dryness is the culprit for the disappointing crop conditions for all three of the major Winter Wheat varieties grown in the U.S.? White Winter Wheat, which accounts for 10-15% of U.S. Winter Wheat production and is primarily grown in the Pacific Northwest, is off to a very poor star,t as the entire region is mired in a moderate to severe drought. Expanding drought conditions in the key Hard Red Winter Wheat growing states of Kansas and Oklahoma are also affecting the newly emerging crop, with good to excellent ratings of only 41% and 31% respectively. Soft Red Winter Wheat is faring the best overall, but even some of the western parts of the growing region in Missouri and Arkansas were experiencing issues due to dry conditions. Before one becomes too bullish on the U.S. Wheat prices, we should note that it is still very early in the season to quantify what effects current dry conditions will have on yields this spring, as crop conditions can improve greatly if they receive ample moisture/snowfall during their winter dormancy.???
Technical Notes? – View Today’s Chart
Looking at the daily chart for December Wheat futures, we notice what could be a head and shoulders bottom technical formation. This bullish technical pattern would need to see a close above the ?neckline? near the 533.00 price level to help confirm the chart pattern. Prices are currently holding above the 20-day moving average (MA), but are hovering just below the 200-day MA. The 14-day RSI has turned positive, with a current reading of 57.95. We see chart support at the October 20th low of 483.25, with resistance found at 533.25.
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