World Awash In Wheat
Today’s Spotlight Market
Estimates for USDA Grains Stocks Report (As of September 1)
Corn: 1.735 billion bushels (2015) vs. 1.232 billion bushels (2014)
Soybeans: 204 million bushels (2015) vs. 92 million bushels (2014)
Wheat: 2.165 billion bushels (2015) vs. 1.907 billion bushels (2014)
Fundamentals
While U.S. Wheat prices are trying their best to form a near-term price bottom, those traders looking to become bullish have to remain wary of the impact of huge global wheat supplies expected for the 2015-16 crop year. The International Grain Council (IGC) recently increased their estimates for 2015-16 global Wheat inventories by 7 million metric tons to 211 million metric tons. Higher Wheat production more than offset increased global Wheat consumption, which is allowing global inventories to reach record levels.
As we move towards Winter Wheat plantings in the northern hemisphere, we are starting to notice some concerns being expressed by analysts that dry conditions in the black region could spur delays in plantings. However, weather forecasters are starting to see increased chances of precipitation in both Ukraine and Russia, which could help to dampen the bullish momentum for prices based on the potential for production issues from this major grain exporting region.
In the U.S., Winter Wheat plantings are running behind historic averages, with 31% of the crop planted vs. the 10-year average of 37%. Grain traders will turn their focus towards the release of the USDA quarterly grain stocks report which is scheduled for 11am central time today. U.S. Wheat inventories are expected to total 2.165 billion bushels as of September 1, vs. 1.907 billion bushels last year. Traders also expect the USDA to raise their estimates for U.S. Wheat production, which could be matched by our neighbors to the north, as Statistics Canada reports its crop estimates On October 2. ?
Technical Notes? -? View Today’s Chart
Looking at the weekly continuation chart for Chicago Wheat futures, we notice the market in a well-defined downward trend since mid-2012, with a series of lower highs being made along the way. However since the end of the 3rd quarter of 2014, prices have started to form a bottoming pattern, with 460.00 for the lead month futures acting as strong support. Prices are currently testing the 20-week moving average (MA) but remain well below the 200-week MA which is near the 640.00 area as of this writing. We have seen the 14-week RSI turn neutral, with a current reading of 49.21. 463.00 is seen as the next major chart support leve,l with resistance found at 530.00.
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