Market Bullets® Wednesday, July 16, 2025: AM

     Throwing the usual suspects, accounting for no movement, or “What skinny branch should the market stand on for support?”

     IKAR, The Russian “Institute for Agricultural Market Studies” is having a Summer Conference in Moscow (not Idaho) on July 17-18. There are seats available… They have cut their 2025 wheat production forecast to 3.013 billion bushels and their export forecast to 1.543 billion bushels, citing drought challenges in some of its southern production regions. The market is watching the numbers as harvest rolls. It’s hard to keep pregnancy a secret for long…If there are real drought problems, they will show up in the numbers at some point. Oddly, Russian agencies are lately more likely to stress crop shortages than to hold up a “everything is alright” sign. Maybe the locals are getting restless?

     Jordan passed on their international tender for 120,000 tonnes of milling wheat for Oct-Nov, after receiving offers from five trading companies. This tender will be repeated, probably in about a week. It’s a relatively small amount, but those can add up.

     Crude Oil prices have softened after a little spike last Friday thru to Tuesday. Diesel has been trading at close to the same level as late February, up some 46 cents per gallon from mid-April lows. The big trend channel for both crude and Diesel remains negatively sloped, and the talk among OPEC+ members is for increases in production.

     It appears that since President Trump gave Russia a 50-day deadline to end the Ukraine war to avoid sanctions, President Putin has taken that as a “signal to accelerate operations. Trump’s threats to send weapons to Ukraine has a long time delay attached, but it seems to be more in harmony with NATO’s perspective. The only effect on wheat would come from more sanctions applied to anyone who appears to be willing to deal with Putin, i.e. “BRICS” member nations.

     U.S. wheat harvest is rolling faster, as conditions are good for thrashing. Winter wheat is 63% done as of July 13th. There is wheat for sale…

     This is a time (quiet markets) where checking on the market performance takes only a few seconds. It’s still worth doing every day.

     The chart base is long and flat, a suitable platform for launching a price move. Stay tuned!

Stay tuned.

Market Bullets® Tuesday, July 15, 2025: AM

     The wheat complex pressed lower, out of the narrow, sideways range between $5.41 and $5.57 of the previous 5 sessions. The July futures faded out with a whimper, with the last 5 contracts delivered on Monday. Global harvest progress lies heavy over the market tone, with the most telling statistic from USDA about increasing production in the U.S. fresh in the mind.

     U.S. winter wheat is now at 63% complete, just under the 5-year average pace. Spring wheat is headed early at 78% and conditions are easing toward some improvement. There was another little surprise in the WASDE last Friday; spring wheat yields are expected to be better than the trade was expecting. Good production news is always bad price news.

     Russia is seeing harvest delays and there are rumors of terminal loading shortages as wheat is slower in arriving at shipping points than anticipated. This is a temporary price-positive in global wheat supply chains, as Russian merchandizers are sighing and breaking their pencils (demurrage is expensive).

     Canada and Ukraine are seeing some small reductions in production forecasts.

     U.S. export inspections for wheat slowed in the last week, as the year-to-date pace of shipping is lagging last year’s pace by just a tid.

      The tariff parade is seeing a flurry of new announcements of increases with more to  be added versus EU and Mexico on August 1. The pattern of hard threats and moderate capitulation is apparently yielding some agreements. The band plays on.

     Very early Tuesday trading is slow, down about 3½ cents, leaning into a reversion to the negative-sloped, 105-session mean line drawn from the highs of last February, and right on top of the Box-o-Rox 60-session moving average. We have no substantive trend, BUT the channel has been slightly positive, with higher highs and higher lows since March 29. This is where we receive the gift of the opportunity to be patient!

     The problem of “Too Much Wheat” can only be corrected in two ways; the passage of time or lower prices. Of the two, lower prices is more decisive, like ripping off the bandaid, and besides emboldening buyers, has the added longer-term benefit of influencing some producers to switch to other crops. Our best marketing response is to be more aggressive with periodic, incremental sales over time, while readying a “re-buy” strategy to be executed on a buy signal when it emerges (an admittedly speculative move, but one that just by being prepared, allows a certain relaxation of stress).

     The global markets are realizing that changes are in the works, and maybe the resolutions of some long-standing issues, but the tunnel curves here, so everyone is walking slowly. Buyers of wheat are hand-to-mouth, but they see the harvest clearly and will not have to extend themselves for many months from now. Producers are reluctant to part with their wheat, but there are always bills to pay, and the market knows this very well.

     Stay on plan. If ya don’t have one, make one. Divide up your wheat and sell it a slice at a time. Watch the charts for range highs (or range lows). Set price limits and talk about them with your merchant. Extract that extra 25 cents when it is available, knowing that even if you miss, the fact that it is an increment allows some foregiveness. At least it’s interesting!

     Let harvest be your “Friday night under the lights.”

Market Bullets® Monday, July 14, 2025: Pre-Dawn

     The WASDE was a whiff for those looking for supportive stats, as the trade decided that larger production of wheat in the U.S. is more important than better exports. The trade was short in their pre-report estimate of of All-Wheat production at 1.903 billion bushels, as the official WASDE was 1.929 billion, an actual increase of 8 million bushels and an error of about -1.3% for the “Trade Analysts”.

     Exports of U.S. origin wheat are projected at 850 million bushels, a 25-million-bushel increase. No surprise as that is what lower prices are supposed to do.

      Projected 2025/26 global ending stocks are lowered a marginal .45%, a 1.2 million tonne cut down to 261.5 million, primarily on reductions for Canada and the EU.

     The Chicago Soft Red Winter (SRW) wheat futures contracts fell out of bed to close down 9½ cents on the day and minus 11¾ on the week. KC Hard Red Winter (HRW) did no better, off by the same 9½, while Minneapolis Hard Red Spring (HRS) was the weakest at a minus 18¼ cent day and minus 34-cent week, the lowest weekly close for that contract since late May.       

PNW White winter wheat ending stocks for this year’s harvest is seen as 93 million bushels versus 80 million last year.

Last week, wheat markets rattled around like a rock in a narrow box. The trade worked hard to find anything to hang on to for positives. But like a perfectly baked loaf gone stale, the market quickly lost flavor after Friday's numbers hit the wire.

The USDA left the bulls wanting. If there was a hint of light, it came from the slight dip in global ending stocks and the 25-million-bushel uptick in U.S. exports. The market sighed and slid back into watching weather reports with diminishing effect on wheat as we flip over to the back half of the northern hemisphere harvest. As there were no longer any further statistical threats, the buyers retreated.

     Speaking of Boxes of Rocks, our Box-o-Rox indicator(s) have gone to “Execute scheduled incremental sales” status. Only Chicago held on by fractions to “Hold”. The simplicity of this indicator is its virtue, with the main idea of being slow to sell when in a defined uptrend and to accelerate sales in a downward trend, all the while dividing the total sales for the year into incremental amounts, e.g. 12 separate sales. This will help to beat the annual average while riding any uptrend that shows itself. Have a look at the BoR charts.

There is still support for this market, its just not strong enough yet to lift prices above the range.

Stay tuned, there are opportunities ahead.

Market Bullets® Friday, July 11, 2025: Pre-Dawn

     USDA’s July World Ag Supply/Demand Estimates (WASDE) is due out at 9:00 AM Pacific Daylight Time (UTC-7)/11:00 AM Central (UTC-5). On release day the market rarely makes a serious move ahead of the report. The tradition is to gauge the results against the trade consensus gathered by survey, and then react according to the accuracy of the guesses. There is sometimes a violent reaction if the trade is surprised, but even if they get it right the trade has a tendency to pause and then resume trade on report day, sometimes exhibiting a “brakes off” surge, even in the event of a dull report.

     Bloomberg’s survey of the trade suggests that the USDA’s world wheat ending stocks for 2025-26 should be 262.5 million metric tonnes, a marginal increase from the previous report. This “jiggling” of the forecast figures has little meaning, but when there is little else for the trade to apply to fundamental market analysis, it becomes magnified in effect.

     Of late, long-term trend for wheat futures has been within a broader horizontal trend channel or rectangle formation, a period of consolidation with the price moving between established support and resistance levels. A decisive break above resistance (e.g., $5.72 Chicago) would be a bullish signal, while a break below support (e.g., $4.99 or $5.30) would be bearish.

     The energy level of wheat prices is low. The trade has become relaxed, even complacent, as the sideways move has become a desert road through Death Valley, with mirages shimmering across the horizon. The thought of a serious rally has become an old-timer’s story, “I recomember back in ’22, when the price moved from $7 to $12 in just two months!” Can those days come again? Mebbe…but it could be a while. Meanwhile, we have to focus on “opportunistic” approaches as we apply every tool to enhance our marketing without adding a foolish amount of risk. Holding large amounts of uncovered wheat in storage as a bet on higher prices later has never been an efficient risk. More money has been lost that way than will ever be admitted!

     Trend-followers have to be patient with up-moves, but also be aggressive when the trend is against us. Slow-walk sales when the trend is positive (let it ride), then accelerate when the trend is negative. Beat the average.

     Stay tuned for post-report review and end of the week perspective.

Market Bullets® Thursday, July 10, 2025: AM

  Market Bullets® Thursday, July 10, 2025: Pre-Dawn

     If you need to sell some wheat to pay the bills, but you are gut-sure that the price is about to rally sooner or later, it is a somewhat practical and not terribly expensive move to buy an out-of-the money call option in the wheat market of your choice. You can do this with as little as a dime ($500 per 5,000 bushel contract). Just remember that time costs money, so the farther out ahead in time you go, the more it will cost for a given price level. It is always a higher cost and risk for better potential. It is not reasonable to buy a call with only a couple or three weeks to expiration. That is putting too much pressure on your certainty. It may be “far” out of the money, like an October $6.15 strike, some 43 cents above the current December contract (upon which it depends), but we have all seen that this market is easily moved that far with little actual reason, except for short-covering by the money funds. Then you have about 78 days until expiration for the market to do its thing. If you are wrong in that time, you are out about what it would cost to store the stuff for that period anyway. If you are right, and the market is near expiration and above the strike price, you can recover some of the “missed opportunity”. The strategy is bone-simple, can be improved upon, and options often expire without making anything, but may allow some reduction of the anxiety of selling wheat at painfully low prices. We like to do this when there is an actual buy signal as a trigger. Call your merchant for more information about this and other price protection strategies.  

     The wheat market has been grinding lower, but not all the way back to the range lows yet. On early Thursday morning trade, the Chicago wheat contract showed a little spark of life, with a quick jump to a positive 6 cents. It’s just nice to see. If there is a reason for the run, it is a headline or other wire-related tidbit, but there doesn’t have to be any profound basis for the move. Weather model shift, Chinese negotiation position change, or other “black swan” landing on the pond…all are potentials. What matters is how much buying power shows up on the charts.

     The trend channel is neutral, about 50 cents from low-to-high edge, and has a slightly positive tone. Friday’s WASDE may provide some direction.

     Stay on track. The longer this market goes without breaking out in either direction, the more significant it will be when it finally does…and it will.

World Ag Supply Demand Estimates (WASDE) Friday morning, July 11th, 2025. USDA.gov

9:00 AM Pacific Daylight Time (UTC-7)/11:00 AM Central (UTC-5)

Market Bullets® Wednesday, July 9, 2025: AM

     National corn condition ratings gained another point this week to 74% good/ excellent, compared to 68% last year and the 64% five-year average. The weather is about is ideal for corn, lots of rain and heat. This is where they say you can sit on the back porch at night and hear the corn growing. Just plain intuition says this corn crop could be a whopper. For wheat that is a message not to ask for sympathetic price support here.

     Chicago Soft Red Winter (SRW) has gained 45 cents per bushel against KC Hard Red Winter (HRW) since the first week of January. This is a somewhat rare condition and a little surprising, since the traditional hard red bread wheat spends a great majority of time priced above the soft red, and this year some major HRW states had been struggling with drought. It may be that Russian 11% (dry) protein wheat has dominated the northern red wheat market by sheer volume and discounted prices. We are watching this relationship (see the spread charts at the bottom of the site “Spreads” page).

     There is an Exchange Traded Fund (ETF) under the ticker “WEAT” in which each “share” represents a bushel of wheat. It is based entirely on Chicago futures contracts and has some special risk characteristics. WEAT is usually liquid and is very easy to trade. The general trade perspective for WEAT at current levels is that the market is in a negative pattern, and WEAK is rated a sell. IF you decide to investigate the WEAT ETF, be sure to understand thoroughly what it is and how it works before you take any actions.  However small it may seem, there is still risk to your capital, and there is no-one responsible for your results but you.

     This wheat market has no mandate. Harvest will continue to dominate the factors driving the market for some weeks to come. Steady is the call.

     Stay tuned. Day by day conditions will change, until one day there is reason to move. The funds are still short (especially looking down the barrel of a heavy crop of corn and beans). We are watching, and the changes always show up first among the charts.

Good hunting!

Market Bullets® Tuesday, July 8, 2025: AM

US Exports of wheat achieved a twelve year high for this early point in the crop year, up 3.7% from last year.  This is not a surprise as wheat has become cheaper in bulk in both the trade levels and through a lower dollar exchange price.  There is no difficulty finding wheat for sale.

        Russia may still have a smaller crop than currently projected.  This is strictly a background factor at this point and is not a good reason to hold wheat in storage.

Winter wheat harvest in the US is past halfway at 53%.

        Indonesia has done a deal with US trade negotiators and signed a memorandum for 1 million metric tonne purchase annually going forward.  There are still negotiations proceeding on other goods.

        The CFTC’s Commitment of Traders (COT) report says large specs covered (bought back) a small net 1596 contracts in Chicago soft red winter wheat.  KC saw a similar change of 1114 fewer open contracts.  The net short-sold positions are still moderately large -63,671 Chicago and -42,348 KC.

        It’s a long road for marketers when the price is trapped in a 50 cent range.  There is temptation to speculate which just becomes an exercise in impulse that increases risk and expense.  Trading is a completely different business that has its own parameters and business requirements.  It can be done appropriately but not with wheat in the bin.

        Stay on plan.  Make the sales according to schedule.  Beating the average may sound like a dull goal, but if done well over time it is usually a massive gain…but you knew that already!  Stay tuned.  When the change comes its likely to be rapid

Market Bullets® Monday, July 7, 2025: AM

     We begin the new post-holiday week right back to where we were last Tuesday, July 1st on the Chicago Soft Red Winter (SRW) wheat charts. Overnight the wheat market faded another 12 cents in SRW and KC Hard Red Winter (HRW). Minneapolis was off about 8 cents and Paris showed the equivalent of minus 5 cents. The prudent traders that were the buyers on Thursday were just covering some short-sold positions ahead of a perilous weekend. On Monday they were apparently replacing the sold positions from last week, along with some cash sales in the country triggered by harvest bills.

     The trend pattern has not changed significantly, still close enough to worry about range-low failure or at least another test of this year’s lows around $5.05 in SRW. Each day we manage to hold above that low is another day closer to a price rally. If it is in proportion to the duration and intensity of the neutral/flat-to-slightly positive slope of the charts, we may be able to declare a seasonal low and move on to another chapter. …Sorry about the repetitive comments. We will have to submit them to the Department of Redundancy Department.

     Monday will bring USDA Harvest Progress for winter wheat, spring wheat condition and Commitment of Traders reports that were delayed last week.

The European Union will cut imports of Ukrainian wheat and sugar by up to 80% to address the concerns of its farmers, according to quotas announced on Friday. This is a mild wheat price positive in the global arena, although the effect will be away from most U.S. export destinations.

Russia is cutting its export tax to zero $ as of July 9th, implying they would like to accelerate sales. This is the lowest that tax has been since 2021, pre-Ukraine invasion.

     The U.S. Dollar Index has paused in its 4-month long decline. Not a trend-change but the first session to show positive numbers for the greenback in the global currency exchange for some weeks, even as it trades near its 3-year low. This is a very indirect and minor influence on daily wheat prices at this point.

     More volatility ahead, on weather mostly. Watch those lows around $5.05 in Chicago, and in KC they’re about the same price. HRS is still needing some supportive weather to make it to August/September without more crop-shrink. Stay tuned.

Market Bullets® Wednesday, July 2, 2025: Close

     Wheat and other grains futures will close early; 10:30 AM Pacific Daylight Time (UTC-7)/11:00 AM (UTC-5) Central Daylight Time on Thursday, July 3, 2025. Markets are closed on Friday, July 4, 2025 in observance of Independence Day.

     Most of the pre-holiday weekend decisions were made and executed Wednesday (to avoid potential low-volume trade on Thursday), but there is always a chance that the short session on Thursday will yield a quick spike, since it takes proportionally less volume to move the price on a short-day. It is more likely that it will be a muted session.

     In the time since the end of March, Chicago wheat has produced an upward-sloped channel of about 45 cents from the rising low edge to the high side. The price has racked back and forth inside the range 9 times, an average of 5 days each way. Today (Thursday, July 3) has already popped up 44 cents in 4 sessions. This kind of hunting pattern is very hard on many small trading accounts, but it counts as a new upward move in the larger picture and shows that there is life in what had been a dull market. Flipping over to the Weekly chart, it doesn’t look like much, but it has triggered the “Hold new sales” light on the Box-o-Rox board. If it whips back below that BoR green line, we will catch up on any sales that had been delayed at that point.

     Winter wheat harvest is about halfway, and since the earlier rain delays, weather has been good for running combines. This week’s Crop Condition reports will be delayed until Monday due to the holiday. Any long holiday during sensitive periods in crop development can bring market changes through weather or other developments.

     The price slope is mildly positive, but the range-top is once again at hand. Owning wheat at the range top will be a genius move if there is a breakout to the upside, otherwise it is just the top end and the return to test the lower end is due. Given the recent, repeated price behavior, the odds today seem to favor another low test. Trend-followers have to wait until there is a defined positive pattern to take action.

Stay tuned, we will track it here. Have a good 4th!

 Market Bullets® Wednesday, July 2, 2025: Pre-Dawn

     Every year the market pays attention to the same factors through spring and into summer. The market is aware that northern hemisphere harvest is pending, the crop is green and has potential based on the moisture available. The price volatility increases as the weather patterns shift and the crop matures. Then a point is reached when the crop begins to shrink slightly, as the ripening begins and potential expansion is no longer a factor (some time near the equinox). Harvest begins in the southern tier of wheat states.

      By the time harvest reaches halfway, the size and quality is pretty well defined. Usually somewhere along that road, unless there is a powerful and usually very obvious factor dominating the market, a seasonal low is printed.

     This year we have had multiple reasons to expect wheat prices to decline past the by-now-well-defined lows since last November, but they did not break down as many believed they would. The funds were massively short-sold on this expectation, but they have reduced their big shorts by 30%-40% over the last couple of weeks (co-incident with the roll out of the expiring July into September or later contracts). Now we are very nearly halfway into winter wheat harvest and there are no hemispheric, wide-area crop failures (even in Russia, although their announcements may suggest problems), and we already have a candidate price for seasonal low in every major contract.

     There is still wheat vulnerable to heat, but that is a fading factor in winter wheat. Spring wheat is struggling, with crop condition 20% or more lower than last year at this point. U.S. Hard Red Spring (HRS) represents only about 25% of the total wheat crop. Canadian HRS is in average condition.

     From here, if there is to be a rally beyond the top side of the recent range about 40 cents above current trading, except for spring wheat, it will depend less on changing supply and more on demand. The Tariff Parade is still marching toward more defined results, with ag sales still on the table. The U.S. Dollar Index has declined more than 10% since the end of February, making U.S. wheat more competitive in global markets.

     Add it all up and it looks like there is a chance for a gradual increase in price going forward, as we watch the spring wheat develop. We still have to wait until it is objectively visible on the charts, using some yardstick like the “Box-o-Rox” or similar tool.

     In the recent roll from the expiring July contract to the September, the continuous charts experienced an “artificial” rally of about 13 extra cents per bushel to account for the carrying charge from July to September. This put some of the contracts above the BoR line and back into “Hold up on sale” status. We feel that this is not much of an issue, as there has not been a failure of the support zone.

     The trend is still neutral to very mildly negative, but we have seen signs of life in the last couple of weeks.

     We will hold-up on new incremental sales until there is evidence that the pattern is against us (defined by a breakdown of the long-term price points that have held up below this market for so long or an objectively negative technical pattern develops.

     Stay tuned, kids. This market is not dead yet. We will track it.    

PS Copper is flirting with its all-time high, a suggestion of healthy global construction demand…or maybe due to lots of data-centers being built to house your family photos, or because the Ai said it will need the wire.

Market Bullets® Tuesday, July 1, 2025: Early AM

No Markets Friday heading into 4th of July weekend holiday.

     USDA’s Stocks Report gave us All-Wheat Seedings of 45,478 million acres seeded against the average pre-report trade guess of 45,438. The evident 40,000 acres will make just a tid more wheat than expected.

     Stocks of wheat in inventory were marked at 850.5 million bushels, 10 million bushels over the average trade guess and 145 million over last year at this point.

     The numbers from the report were very mildly bearish, just over the line, but the market seemed relieved it was not a larger miss.

     The weather report over the long weekend will be watched closely, but the 18-state winter wheat harvest is 37% completed versus 42% on average by now.

The PNW winter wheat harvest is still waiting for the north slopes and coves to dry out. Early hand-harvesting of a few heads shows maybe smaller heads than we have recently been used to, but some nice round berries.

      Overall remaining winter wheat condition is stable around 48% Good-to-Excellent condition versus 51% normal.

     Spring wheat condition is 53% Good-to-Excellent condition over the five major spring wheat states, a disappointment versus 72% last year.

     The roll-over from the expiring July futures contracts to September is complete. The charts reflect about 13 cents higher for September over July, a 4.3-cent per month carry as the July Chicago futures enters its physical delivery period.

     The pattern of this market has been sustained over and over again in a relatively narrow band of prices near long-term lows. Now even in harvest there seems to be healthy buying below the current price. Eventually this will chew through the “easy wheat” that gets sold at harvest to catch up on bills, opening a window for a sustained price rally. For now, the odds of a big price runup in wheat is remote. There is no problem for importers finding wheat for sale.

     If the world can stay sane for a month or two, we may see wheat move more easily into global markets, the easier the better for consumption.

The timing of the announcements of Tariff Deals for the Independence Day period is good. The objective impact on wheat prices may be noticeable.

     The U.S. Dollar Index continues to decline. Interest rates are sliding, with or without the Fed.

     The trend for wheat is still neutral, with little itty-bitty sparks of potential that may require some confirmation bias to see. The Box-o-Rox indicator is very close to going back up over the line to make a “hold” on new incremental sales. Depending on the type of chart, the market is right on top of the line. This will clarify shortly.

     Stay tuned, as the market continues to hunt for balance.  

Market Bullets® Monday, June 29, 2025: Pre-Dawn

     USDA Stocks-In-All-Positions inventory report and Acreage Estimates are due to be released at 9:00 AM Pacific Daylight Time (UTC-7)/11:00 Central (UTC-5). The wheat and other grain markets usually trade very gently until these reports are completed, then price behavior responds accordingly if the figures are outside of or within the range of pre-report guesses.

     The 1st business day of each month is a scheduled day for the Box-o-Rox indicator program during which if the daily price settles below the moving average all incremental sales will be caught up. This indicator is under further development. Please call, text or email via “contact’ with questions (see posted hours for calls).

More detailed commentary post-report.

     The U.S. Dollar Index versus a basket of mostly Euro-Asian currencies has declined 10.8% since the end of February, and is at a low last seen in March of 2022. This makes U.S. goods and services more competitive overseas, but it also makes imports to the U.S. more expensive in dollar terms (strengthens domestic companies’ sales).

     Let those combines roll! Keep the header in the wheat!    

Market Bullets® Friday, June 27, 2025: Close

     Wheat trade took a day off after 9 trading sessions of intense whipsaw price movement. Friday saw Chicago settle up 4½ cents for a minus 43-cent net on the week. KC HRW was minus ½-cent on the day and minus 44½ on the week. Hard Red Spring (HRS) plus 1¼ on the day, minus 28¾ on the week. Paris was in on the pattern with a plus 2-cent day and a minus 38-cent per bushel week. Range trading…aghh!

If we pull out the monthly charts, wheat has done nothing for almost a year of sideways movement with a range of about 88 cents. That has been just barely enough room for a couple of good cash sales. It may be small comfort, but at least the monthly chart shows that it has been what amounts to a storm in a teacup, especially as the world has seen wars and rumors of wars, tariff confrontations and fear and loathing on the deportation front. The wheat market has barely acknowledged any of the turmoil.

     The crop about to be brought in is not likely to be a record, but it will make wheat for sale. Monday’s Stocks Report and Acreage estimates will help concretize the nebulous shape of the northern hemisphere wheat crop. 9:00 Pacific Daylight Time (UTC-7), 11:00 Central (UTC-5).

     The CFTC’s Commitment of Traders Report on Friday revealed more short-covering, about 15,000 net short-sold contracts bought back in Chicago, and about the same in KC. Both contracts are still seeing relatively large new shorts, but less than half of the aggregate net shorts in KC since mid-May. 48,000 few net shorts in Chicago SRW. There is still work to be done here! The market lacks motivation. At this point it seems best to continue to market wheat incrementally on schedule. Box-o-Rox sells (or accumulates another) 1/12th each month on the first business day. The current market is trading just below the BoR moving average line, flashing a “Proceed with Incremental Sales on Schedule” signal. The BoR is only an indicator, and is subject to whip-saw movements at times.  

     The schedule for sales reduces this stress. Call text or email with a question about of this bone-simple indicator.

     The trend is neutral to negative, with the current price parked very near the low end of the long-term range. The northern hemisphere wheat crop is still expanding, but due to slow and reverse as it usually does as the crop matures. The market knows this.

     Stay tuned, drink more water. The heat is here!   

Market Bullets® Friday, June 27, 2025: AM

     The last three days of the last week’s decline, the volume dropped off each day. Thursday’s drop of 7¾-cents in Chicago was on half of the volume of trade as that of Tuesday’s minus 17¾-cents, strongly suggesting a deceleration of the move down. Very early AM trade on Friday had Chicago up 6-7 cents. KC Hard Red Winter (HRW) was up a nickel, as was Minneapolis Hard Red Spring (HRS). Paris was indicating a plus $.05 as well, so the end of the week may be the end of the acrobatic, month-end episode in which Chicago wheat futures was up 50 cents and back down the same in only 9 trading sessions.

     We will see a Commitment of Traders (COT) report released this afternoon, but the data will represent only through last Tuesday’s trade. It seems certain that the funds were the sponsors of the price movement, but it does not read like a short-covering run…more like a late month-end/quarter-end roll with extra energy due to Russian drought talk and a cessation of active warfare in the Middle East. It does not matter much what precipitated the whip-saw pattern, since we ended up about where we started and were given a teaching picture of how difficult this “range-trade” business can be. We are at mid-May price levels once again.   

     Ethanol blending in gasoline in Brazil is double that in the U.S. as they are running at 30% ethanol in the gas versus 10-15% here. They also have biodiesel added to diesel fuel at 15%. If it were not for this special band of demand for corn and soybeans, those markets would likely be trading at a much lower price.  

     Monday morning we will have the Quarterly Stocks-In-All-Positions inventory report from USDA, along with the Acreage Planted update. Per reports of a Reuters survey, USDA is expected to raise its estimate for U.S. All Wheat plantings to an average pre-report trade guess of 45.438 million acres. Winter wheat as a class is projected to be lower than the March reported figure, with pre-report ideas at 33.299 million acres.

     The ending stocks update average pre-report trade guess for current wheat supplies is at 836 million bushels as of June 1.

Report day is nearly always a quiet pause before the stats are released, so Monday morning will likely be a low volume period. Once the trade has the new figures, then trading resumes, occasionally with big sudden moves if the trade had anticipated incorrectly.

     Monday’s data dump will occur at 9:00 AM Pacific Daylight Time (UTC-7), 11:00 AM Central (UTC-5).

     The International Grains Council (IGC) raised their official estimate of World wheat production to 808 million metric tonnes, a +.25% adjustment, and ending stocks for 2025/26 up 2 million tonnes to 264 million, +.76%.

     Wheat prices were trading without conviction at 8:30 AM PDT on Friday, up 2-4 cents on low volume. KC Hard Red Winter (HRW) was down 1-2 cents, and Hard Red Spring (HRS) was up 1-2. Winter wheat harvest is dominating the fundamental information space, as the world gets a little respite from Israel and Iran. The wheat price trend is neutral but Chicago is below the Box-o-Rox indicator line, giving a “proceed with incremental sales on schedule” signal.

     Stay on plan. Stay tuned.

Market Bullets® Thursday, June 26, 2025: Close

     The wheat complex has a familiar problem. Every time it pokes its head up and looks around the world, it finds more wheat for sale than needed, so it ducks back down into its burrow for another six weeks of playing solitary on its phone. The natural, logical reaction to this fresh data is to go back to price levels that are more attractive to end-users/buyers in order to find more homes for homeless wheat.

     The U.S. Dollar Index has weakened more than 10% since the end of February, theoretically making U.S. wheat (and other goods) less expensive in the global markets, but there is still plenty of wheat being sold into the European, Euro-Asian and African markets, just not from U.S. origins.

     This is just the open wheat market doing what it must do in order not to become even worse, which could be taken to mean a totally government-managed, non-transparent pricing system, subject to quotas, export taxes and other features of a bureaucratic system.

     The morose tone of the wheat complex in this season is a normal, cyclical phenomenon! Whenever we get into a protracted period of too-low wheat prices, there are pressures to change “the system” somehow to make it “better”. There is no “better way” to solve the problem of too much wheat for sale than lower prices for as long as it takes.  

     Part of the long-term solution for wheat marketers is that we have to increase focus on marketing plans, evaluating risk versus return and bearing down on the ways to minimize exposure to a negative price environment. We absolutely must have a legitimate, operational plan for lower prices that is more sophisticated than “growing and storing wheat until the price is better”.

      It’s only one piece of the puzzle, but a genuinely valuable one. The market will always be a challenge, but it can be neutralized in our favor. One thing has always proven to be true; It will get better.

     Stay tuned. Stay loose. Hang low, ready to go.

Market Bullets® Wednesday, June 25, 2025: Pre-Dawn

     No-one is complaining about the high moisture count and rising temperatures in corn country. On the contrary, corn futures have declined almost $1 per bushel since the end of February as heat and moisture are the twin factors most desired by growing corn plants. The funds have reduced their former massive net long-bought position by about 362,000 contracts in that time. There was some sympathetic “sisterly” support for wheat from the corn price until the decline began in the first week of March, 2025, but that source of positive influence on wheat is absent today.

     Complacency is a bad habit. We are guarding against relying too much on the long-term support lines on the graph. There is no magic in them, as there is plenty of room below, given proportion to the duration of the base from November of 2023 on the monthly chart. A break in such support would be a red flag.

     Paris 11% dry Milling Wheat futures printed a brand-new low dating back to March of 2024 on Wednesday. This contract reflects a wide area of wheat production from the Black Sea to the European Union (France is the largest). It is a global price discovery contract with increasing influence.

     Teucrium, a wheat futures based ETF (https://teucrium.com/etfs/weat), provides some technical comments along the way. The telling phrase from their current page: “There are few to no technical positive signals at the moment.” The Exchange Traded Fund (ETF) trades one-bushel equivalent shares. Be sure to examine their prospectus before taking action if you feel attracted to their product, as the fund has some special risks. The following is a reminder about risk:

     Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you, in addition to thorough discussions of worst-case scenarios.   

     Quarterly Grain Stocks report on Monday, also the ending stocks for the 2024/25 wheat marketing year. Analysts estimate a total of 836 mbu of wheat on hand on June 1. If the reports vary widely from the pre-report trade guesses, volatility is likely to result.

     We will go on monitoring the low side of the massive chart base pattern at about $5.05. If that support level fails to hold on a closing basis, the trap door will be open to a lower range. That is why planned incremental sales of wheat on a schedule can make so much sense over time.

     The four trading sessions in Chicago wheat futures ending at the close on Wednesday, June 25 gave us a 46-cent carnival-ride-style drop. It followed right on the heels of a similar rise on short-covering activities by the infamous trading funds. They may have merely turned around and replaced their short-sales in the September contract that had been carried in the July. When the money moves, it is because their algorithms and whatever other formal decision-making systems they apply tell them to. They are not normally subject to emotionally impulsive trading, and the market factor power they represent competes with government and the weather for influence. Occasionally their systems all go green or red at once.

     The Russian-based private market analyst SovEcon has raised their 2025 Russian wheat crop forecast from 82.8 million metric tonnes to 83.0, belying the announcement of drought problems in Krasnodar and Rostov Oblasts, among others. The market seems to be ignoring potential heat and wind problems in Russia, and every day that passes without serious evidence of crop deterioration, the smaller the chances are that there will be any.

     SovEcon this morning raised their 2025 Russian wheat production estimate from 82.8 to 83.0 MMT

     The European Commission revised forecast for cumulative 2024/25 soft wheat exports are at 19.93 MMT through June 22, down from 30.53 MMT a year ago. Their statistical crop year-end is June 30.

     All of the fundamental market factors are either neutral or negative at the moment. Russian drought does not seem to be hindering analysts from forecasting expanding estimates. U.S. wheat harvest is expanding rapidly. The long-term wheat charts for our best bellwether contract in Chicago Soft Red Winter (SRW) wheat are either neutral or negative in slope. It will take more than a 50-cent short-covering pop to break into a new market pattern at this point. “Opportunistic” marketing given a 50-cent, high-low range is remarkably like speculative trading, and it carries the risk of distraction from other tasks for a relatively low probable rate of return. Lets be careful out there!

Stay tuned.

Market Bullets® Wednesday, June 25, 2025: Early AM

     The world is working on what appears to be a new direction. The Iranians are exhausted, the Israelis are weary, as their leadership has expended a huge amount of political and social capital in an effort to change the status quo. In Iran, the now-old men in horn-rimmed glasses and black turbans are still in charge, but they sense change. On November 4, 1979, almost 46 years ago, 52 Americans were taken forcibly from the American embassy in Tehran by a group of young Iranians and held in a bid to re-claim some of the lost glory of Persia. It has been a long road to this point, but there is change in the wind.  

     The U.S. in 1979 was still dominating the global wheat market. If we had a weather problem in the Midwest, the price went up. U.S. wheat producers enjoyed a market share of the global wheat trade estimated to be about 45%. U.S. wheat was going into Russia, China and Japan, accounting for more than 30% of U.S. wheat sales. Latin America, the Middle East and Africa represented more than half of U.S. wheat sales.

Today, the U.S. market share of global wheat trade is about 11%. Russia alone now accounts for more than 22% of world wheat sales outside of their domestic use and would be closer to 30% of the total exports if not for the conflict with Ukraine. Ukraine would account for about 10% of global wheat trade (now at about 5%). Potentially, these two large wheat producers could reach nearly 40% of global trade under post-war conditions. This is coming. What shape it will take is still not clear.

     U.S. wheat growers are recognizing that wheat is now a widely diversified crop grown in so many different global regions that a weather event must by continental in size to move prices. We are adapting to the idea that the marketing of high-quality wheat requires a much more intense and deliberate study of the markets, price movements and opportunities than ever before. U.S. wheat is still vital to the world’s people. We can deliver more specific varieties and higher quality. This is our “comparative advantage” in the world wheat market.

     Innovation and high quality comes at a cost, the coverage of which cannot be covered by government programs with 5-year plans. It must come from the open and free trade of wheat anywhere there is demand. This requires that we become and remain the best in the world at efficiently pricing and delivering what wheat customers want.

     The bellwether Chicago market is quietly trading down about 2-3 cents at 5:00 AM Pacific Daylight Time (UTC-7) Wednesday morning. The price has reverted to the 190-day statistical mean line drawn from the October 2024 highs at $6.17 per bushel. The downward move has been in proportion to the dramatic highs seen as the Russian tanks crossed the Ukrainian borders in early 2022, but this very large cycle is now nearly exhausted, as wheat trades today at a baseline price that was well established in 2020. There is always more room in any big trend, but this one seems “mature”.  

     All of the exchange contracts are trading at or below their respective “Box-o-Rox” (BoR) moving averages except Minneapolis Hard Red Spring (HRS). If there is a leader on the potential upside, this is probably the one to watch. We will be watching the Inter-Market Spreads.

     The baseline is still holding. It’s trackable. Let’s track it!

Market Bullets® Tuesday, June 24, 2025: AM

     Iran’s parliament apparently voted to close the Strait of Hormuz, that infamous “choke-point” for shipping that lies between Iran and Oman, a key global oil shipping passage, but the parliament’s actions are similar to our House of Representatives, able to make a strong political statement in passage of a bill, without any assurance that it will ever be finalized. It’s a safety valve. The supreme leaders still have the final say.

     There is very little global news wire content that directly affects wheat prices. The weather is always going to be a subject. It gets hot in the summer and there are either storms and rain, or high-pressure domes and heat. None of this is large enough to move a market the size of wheat. Once maybe, when the U.S. completely dominated the global wheat market back in the 60’s and 70’s but no longer, with a diversified world wheat production capacity.   

     When there is such a vigorous move in either direction, there is no practical way to forecast the next turning point. There is considerable momentum to the downside in Chicago wheat futures as of the early hours of Tuesday. A measuring point will emerge soon, but until that point shows up, we just follow the slope and try to stay out of trouble

     If we are marketing a portion of our production on a schedule, we will make the planned sale on time if the price is at or below our Box-o-Rox indicator line, otherwise we will stand back and concentrate on the larger picture. One thing we like to do is prepare a re-buy to be executed on an identified change in trend. There is no reason to buy right now.

Reducing risk over time requires a measurable and repeatable sales program that allows us to identify what is working and what is not. Incremental sales are a big part of that program.

Diesel has printed some interesting charts. A large reversal to the downside with some follow-through on Tuesday morning has pushed the NY Harbor diesel market back to known ratio targets. Retail prices in the U.S. will lag considerably behind this whip-saw move, but the market clearly has taken some of the fear of Middle Eastern war.

     This is trackable, but requires patience, precious. Stay with us.    

Market Bullets® Monday, June 23, 2025: AM

     Chicago wheat has given back the entire episodic challenge run to the previous mid-March highs, and has returned to the 39-session statistical mean line from the end-of- March lows. If you blinked or were away from the screen for a long weekend, you missed it!

     Diesel has posted a massive, single day downward reversal on Monday, opening with a stab to a one-year high and then collapsing back to trade below last Wednesday’s close. Crude oil is also $7/Bbl below its session highs. The session is still open, so anything goes, but it looks weak in the short run. (Resolution in the Middle East?)

    2-Year treasuries are trading slightly lower rates (higher paper price).

     Wheat is still trading above the Box-o-Rox indicator.

More after the close - stay tuned.

Market Bullets® Monday, June 23, 2025: Pre-Dawn

     So far in the new week, the Chicago wheat futures contract is showing no impulse to follow-thru on the short-covering pop that showed up last Wednesday. It is not painting out the image of a new, powerful uptrend, at least not yet. Another credible indicator of Sukhovey wind or other crop-shrinking factor in Russia could trigger another run at the old high from mid-March, 2025 at about $5.75, but this line seemed to hold down the price last week. The market seems reluctant to break thru. The sellers are holding the line.

     The Commodity Futures Trading Commission’s Commitment of Traders Report that usually hits Friday was delayed until Monday PM, due to the Juneteenth holiday, but Monday’s numbers will not reflect Wednesday’s run, as they are issued each Friday as of the previous Tuesday. It is certain there were some funds covering shorts, but the volume of buyer-motivated trade will not be spelled out clearly until the coming Friday afternoon.

     Meanwhile, there is little or no disturbance of “rhythm of thrash” happening in the U.S. Midwest.  

     The Box-o-Rox indicator is flashing “hold new sales”, but the idea of selling the top end of the range is still valid, even with the pullback from Friday and early trade Monday. Its’ seller’s choice. For perspective, the market gave a 48-cent gain from Friday the 13th through the Wednesday jump, 4 trading sessions. Even PNW white wheat managed to peek at $6.40 for a few moments, the best it has been for many months, but it looks like that skinny little window is closing for now.

     The trend is defined as positive. The reasons for the market’s behavior are probably not fundamental in nature, more of a technical correction. It is the “Silly Season” for the wheat market after all. There remains much more for this picture to emerge. The trigger for more buying is the $5.75 number on the July futures chart in Chicago. We are about to roll to September, which is already at $5.80! Do not allow this “Continuous chart” artifact to confuse your signal! The carrying charge from Jul to Sep is almost 16 cents for two (2) months of storage. The memo from the market: “I don’t want your wheat today, please hold it in storage for a while.” Plenty of contradiction and dithering here, typical of range tops. *Hairball says, “Last Wednesday’s short-squeeze rally has not been repudiated (yet).” This is a hairball market.

     Stay tuned, there is more to come.

     *In Mark Twain’s “Adventures of Huckleberry Finn” Jim uses a hairball from an ox's stomach to predict the future for Huck. 

Market Bullets® Wednesday, June 18, 2025: Close

No Markets Thursday (Junteenth) National Holiday

     Wheat led the way on Wednesday heading into the Juneteenth holiday.

     The only newswire item that may have helped trigger a short-covering rally (where the large speculative trading funds buy back previously sold contracts) was that at last Russia is admitting that there are real drought concerns in two of their largest wheat production regions. The market effects of the official announcements of “drought emergency” financial assistance for farmers in these regions may be debatable, as the Russians have never shied away from using such public media output to push prices, so we will avoid assigning heavy meaning about the forward outlook of global wheat prices, but we have probably not heard the last about the underlying drought issue in Russia, and that is a price-positive factor.

     Another conjecture may be that the funds have tired of carrying large net short-sold positions without much profit in the sideways price channel since at least last fall. The usual rollover of July to later contract months may be playing a role, as “buy July – sell September (or later) would require many contracts to be traded in the process. The spreads do not show any massive shift, so it is possible that the funds are taking the opportunity to merely “lift” their shorts and are moving on into other, greener pastures for the moment. Just sayin’…

     Having a reason to explain why a market jumps so hard after a protracted period of sideways range trade is desirable but not always useful. Correlation does not imply causation. Assuming a given reason may lead to faulty decision making going forward. The bottom line here is that a positive trendline is being confirmed on the charts. Chicago wheat futures are 69 cents above the lows of late March and are now challenging the intermediate March high at $5.75, leaving only the $6.09-$6.17 band as an upside target (another 34-42 cents).

     Our Box-o-Rox indicator is easily in the “hold further incremental sales” mode.

     PNW white wheat bids are the strongest we have seen since Mid-March of 2025.

     Friday is a weird day, caught in between Juneteenth and the weekend on a really nice early summer day, causing trading desks to be short-staffed as the senior traders are at the lake with family and junior personnel get to sit in the boss’s chair (but leave the cigars alone). Large trading decisions have probably already been made, so unless there is hot news from the front, the session may be lower volume. Midwestern combines will still be rolling into the face of the first really warm week of the summer for many early harvest test-cutting areas.

In spite of some heavy fundamental supply statistics, the market is rallying right into harvest, a sign of strength and probably volatility ahead.

     This is getting interesting. It’s trackable. Let’s track it!

Market Bullets® Wednesday, June 18, 2025: Pre-Dawn

     The wheat market is trying to trade on marginal statistics “trim a bit here, add a bit there”. Many ag-oriented news wire desks are opening their wheat segments with crude oil and Dollar Index comments (for lack of interesting items about wheat), but both of these key contracts are slightly off of their extremes of the last few days. The U.S. corn belt is getting some degree days of heat, but there is more rain in the forecast. Israel and Iran are both getting exhausted, but Iran seems to be on the ropes at present. It feels like we may be past the midpoint of this phase of the war. The markets seem to be on “hide and watch” protocol.

     Chicago wheat continues to hold small gains at push toward the upper end of the recent range. The summer season is warming up…it is surprising no-one. Winter wheat harvest is about 10% complete, with reports of decent test weights in Texas up through Oklahoma into Kansas. The spring wheat crop is getting stronger, still below last year’s condition level, but there will be a crop.

     On balance it seems like it makes sense to try to sell the top end of this range channel that has contained wheat prices for many weeks. The problem with range trading is that it works extremely well…until it doesn’t! The breakout in either direction, when it comes, will likely be violent and could be large, but that also seems unlikely until harvest and the inevitable maturing of the crop make the crop more definitely measurable.

     The Box-o-Rox indicator is reading, “hold sales”, but it has been tiptoeing back-and-forth across the line. Since it is not a “system”, but an indicator only at this point, it is prudent to watch the range for new patterns and sell incremental slices of wheat on a pre-determined schedule using “stops” with the merchandiser. A “stop” in this case means that if the price slips down to or below a certain price, there should be a sale executed automatically (or at least an alert phone call), otherwise no sale if the price does not drop. Some desks will do this with you and some will not. Call ‘em and ask. It helps to have a good relationship with your favorite co-op buyer.

The short-term trend is still upward, but demands close observation.

     The biggest weight on prices is the harvest, but the market already has accounted for that. The lack of direction is a sign of lack of motivation.

Stay tuned.

MarketBullets® Tuesday, June 17, 2025: Dawn

     Since April 29th, the Chicago lead contract has set a series of higher highs and higher lows, the signature of an uptrend, but this pattern is all within a trading range of 50 cents, which makes it a legitimate uptrend, but without strong conviction. We will not ignore any trend, and the rules for trading do not change much in a narrow channel, but it is more of a challenge, as trend confirmation takes time, and there are some moves in the last 3 months that traversed half of the range in only a couple of sessions.  The use of trend-following as a device to keep from losing money on an inherently forever-long position is less effective if whip-saw position management is imposed.

     It requires discipline to watch a significant gain fade away while waiting for trend confirmation, but that will happen sometimes if we follow our own marketing plan rules. In a volatile and liquid market like wheat, holding in a defined uptrend and selling when that definition is changed is the key. The magic of incremental sales on a schedule over time is what makes this emotionally palatable.

     The global weather conditions for the northern hemisphere’s wheat crop  has been about as good as could be asked, even with marginal crop condition in some areas.

     Russia has not delivered the crop disaster that is appeared might be pending last fall, although there is still time for problems large enough to move prices, but that window is shrinking.

     The fundamental pressure that harvest brings to the supply side of the equation is steady and still expanding. Marketing in the price environment in which we find ourselves requires some attention to be paid to the charts.

     For the new-crop season 2025-26 to date, U.S. export wheat shipments total 21.7 million bushels, 17% below 2024-25 for the same period. It is still very early in the game.

     The Israeli/Iranian war grinds on, but there is a sense that Iran will not be able to sustain the pace. If they get desperate and decide to try to force other nations in the region to intervene via shipping chokepoint blockages (Straits of Hormuz) or other coercive means, the price of oil (hence diesel) will be disruptive. Global dry bulk freight is already rising quickly, now reaching prices last seen in October of 2024.

     The U.S. Dollar Index continues to set new lows dating back to March of 2022. This will help to create more demand for U.S. origin goods (including wheat), but the direct effect on day-to-day prices is buried under a lot of noise right now.

     The wheat trend is still tepidly positive, and northern hemisphere crops are rapidly reaching the season in which increases in production estimates slow down and begin to reverse. The market is having no trouble finding wheat for sale.

     Stick to the marketing plan, follow the rules. Give the big picture 5 minutes of focused attention every day.

     Stay tuned here.

Market Bullets® Monday, June 16, 2025: Pre-Dawn

     Wheat opened its night trade session in Chicago with a quick decline of -9 cents, but by about 2:30 AM Monday morning had begun to stabilize and recover. The volatility is likely to continue in the current market environment, but the fundamental background is weak, suggesting potential for yet another test of the long-term lows.

     The funds (usually considered a non-fundamental factor) are still holding large net short-sold positions and the hot bounce on Friday managed to breach the BoR moving average to the upside. Monday so far seems ready to whip back below that line again, making marketing decisions frustrating unless there is a scheduled incremental sale calendar. Given that structural factor, we have only to make the scheduled sale using the indicator on that day. Arbitrary? Yes. It is some comfort then to have a re-buy strategy prepared in advance to apply if and when the market creates a confirmed uptrend. Bear in mind that this strategy is a speculative endeavor, and is not for every marketer, but it does have advantages over holding wheat in storage for the same speculative reasons. A thorough review of the risks and requirements of owning wheat using options or futures is an absolute must in this case. Call your merchant for a review of the alternatives.

     Diesel has spiked to a high not seen since February, 2025. It reached a key ratio upside target, but then pulled back early Monday AM. This is definitely due to Middle East tensions as the Israelis and Iranians pelt each other with missiles and bombs. Iran is likely considering using access to the Straits of Hormuz, a vital “choke-point” for oil shipping, as a way to pressure other nations away from supporting Israel.

     The U.S. Dollar index is at a new long-term low, dating back to March of 2022, making U.S. wheat more competitive.

      There is a suggestion of a better pattern in Chicago wheat futures, but the contract is still locked inside the sideways range dating back to last August. It will take another 20-25 cent shot to break out to the upside over $5.57 in the July contract (the roll from July to September will begin within a few sessions, and at current values it will reflect a 15-16 cent carry (creating an upward chart gap in the “continuous” charts, but the technical levels will still be valid. The low end remains intact at around $5.00 July, about 35 cents below current trading.

     Stay tuned. More later. Good hunting!

Market Bullets® Friday, June 13, 2025: Close

     Diesel and WTI Crude oil contracts both jumped over 7% on the Friday session on the track of Israeli pre-emptive strikes on Iranian nuclear facilities, key nuclear and military personnel along with significant “head of the snake” hits on high ranking military officers. Iran has “withdrawn from talks with the U.S. on nuclear limits”. The availability of crude oil and distillates has not be directly affected (yet). It does appear that Iran’s response has been somewhat slow and ineffective so far, and Iran’s proxies and allies in the area have not expressed intentions to enter the conflict directly (yet). The correlation between the Israeli/Iran strikes and response should not be considered causation for a wheat rally. Most U.S. markets are far away from the Gulf of Oman!

     The wheat market jumped vigorously Friday, with gains from 13-18 cents per bushel across the futures board (including Paris 11% dry milling wheat). The funds move on more than once set of principles, and when the money moves it can create trend-affirming power. At times they move due to fundamental changes in wheat supply/demand factors, but sometimes they move because of a Fear Of Missing Out (FOMO). When war or rumors of war create large potential market moves in crude oil, diesel fuel, gold, or anything peripheral, the money managers become anxious. Wheat has not produced much in the way of profits for many weeks of sideways trend-channel behavior, and the decision to move capital to more active and lucrative sectors is not uncommon.

     The weekend weather and intensity of Middle Eastern war will set the tone for Monday. Meanwhile we recall that the World Ag/Supply/Demand Estimates report on Thursday was not necessarily negative, but in fact held some mildly positive new figures for wheat. Altogether the table may be set for yet another challenge of the recent highs. Many trading teams will be reviewing all of USDA’s stats and the Russian weather again before trade begins early Monday. It will become clear early if there is to be follow-thru on Friday’s anxious rally.  

We will be watching.

Market Bullets® Friday, June 13, 2025: Pre-Dawn

     The World Ag Supply/Demand Estimates (WASDE) came to a soft landing on Thursday morning, with most new ending-stock figures just a percent or two smaller than the average pre-report trade guess. With the single exception of global soybean ending stocks, none of the official estimates for domestic or global wheat, corn or beans were outside of the range of trade ideas. This reads like a mildly price-positive report, but the market pretty much ignored the stats and went straight to overall improving crop condition in most production areas.

     The largest variation from trade guesses was the U.S. new crop, all-wheat figure, for which the guess was 2.89% above the USDA forecast at 262.76 million metric tonnes (9.65 billion bushels), a 10-year low.

     It takes a wide area being deeply affected by adverse weather to move the markets with conviction. There was a single exception in fading U.S. Hard Red Spring (HRS) wheat (probably some Canadian HRS as well) crop condition, leading to a plus 1¾-cent gain on Thursday. HRS is the only wheat futures contract to be trading above it’s Box-o-Rox (60-day moving average) price at the close.

     Other Global crop surveys are coming in with incremental improvements in wheat crop expectations.

     Strategie Grains (a private French company specializing in European and global analysis) increased their 2025/26 E.U. soft wheat production estimate 0.69% from 129.8 to 130.7 million metric tonnes.

     Coceral (a European trade association) raised their 2025 E.U. + U.K. soft wheat production estimate a hefty 4.3% from 137.2 to 143.1 million tonnes, versus 126.3 million tonnes last year.

     In Argentina, the non-profit Rosario Exchange lowered their 2025/26 Argentine wheat production estimate from 21.0 to 20.7 million tonnes on excessive rain at planting season. Even with this most recent decline in estimated production, it is the third-largest wheat production expected in the last 15 years for Argentina, continued evidence that the new administration led by President Javier Milei, elected on December 10, 2023, marks a significant shift in Argentine politics and trade policy. Milei is of a libertarian perspective and the first of this philosophy to be elected in many decades. His administration bears a focus on deregulation, austerity, and reduction of the size of the state. Argentina is not a current potential member of BRICS, and unlikely to join. In the 1980’s, Argentina was a dominant world player in the wheat trade, a position that was lost under several socialist administrations that came later. It looks like they are back!

     A month ago the wheat market was building-in some price premium against northern hemisphere wheat crop limits, but the conditions have improved enough to render that risk less in the eyes of the trade. Once again, the market is testing the resolve of the buyers at the lower long-term price range percentiles. The global trade seems untroubled by this development!

     The trend for wheat remains range-bound and seems likely to be so until there is a significant development. Potential Chinese wheat buying, always a chimera in global markets, is in the coffee-talk, at least for the moment. There are rumblings of crop difficulties there. Then of course there is the “tariff parade”.

     There is reason to follow this market closely. When the market ignores stats in the first hours of trade after a report, the reality often bleeds through and shows price support later.

     Stay tuned, as there is always more to come…Israel and Iran will dominate the coffee-talk and the news wires for a couple of days now.

See: <Crude OIl>, <Diesel>, <Global Dry Freight> and <Gold> charts for developing potential.

Market Bullets® Friday, June 13, 2025: Pre-Dawn

     The World Ag Supply/Demand Estimates (WASDE) came to a soft landing on Thursday morning, with most new ending-stock figures just a percent or two smaller than the average pre-report trade guess. With the single exception of global soybean ending stocks, none of the official estimates for domestic or global wheat, corn or beans were outside of the range of trade ideas. This reads like a mildly price-positive report, but the market pretty much ignored the stats and went straight to overall improving crop condition in most production areas.

     The largest variation from trade guesses was the U.S. new crop, all-wheat figure, for which the guess was 2.89% above the USDA forecast at 262.76 million metric tonnes (9.65 billion bushels), a 10-year low.

     It takes a wide area being deeply affected by adverse weather to move the markets with conviction. There was a single exception in fading U.S. Hard Red Spring (HRS) wheat (probably some Canadian HRS as well) crop condition, leading to a plus 1¾-cent gain on Thursday. HRS is the only wheat futures contract to be trading above it’s Box-o-Rox (60-day moving average) price at the close.

     Other Global crop surveys are coming in with incremental improvements in wheat crop expectations.

     Strategie Grains (a private French company specializing in European and global analysis) increased their 2025/26 E.U. soft wheat production estimate 0.69% from 129.8 to 130.7 million metric tonnes.

     Coceral (a European trade association) raised their 2025 E.U. + U.K. soft wheat production estimate a hefty 4.3% from 137.2 to 143.1 million tonnes, versus 126.3 million tonnes last year.

     In Argentina, the non-profit Rosario Exchange lowered their 2025/26 Argentine wheat production estimate from 21.0 to 20.7 million tonnes on excessive rain at planting season. Even with this most recent decline in estimated production, it is the third-largest wheat production expected in the last 15 years for Argentina, continued evidence that the new administration led by President Javier Milei, elected on December 10, 2023, marks a significant shift in Argentine politics and trade policy. Milei is of a libertarian perspective and the first of this philosophy to be elected in many decades. His administration bears a focus on deregulation, austerity, and reduction of the size of the state. Argentina is not a current potential member of BRICS, and unlikely to join. In the 1980’s, Argentina was a dominant world player in the wheat trade, a position that was lost under several socialist administrations that came later. It looks like they are back!

     A month ago the wheat market was building-in some price premium against northern hemisphere wheat crop limits, but the conditions have improved enough to render that risk less in the eyes of the trade. Once again, the market is testing the resolve of the buyers at the lower long-term price range percentiles. The global trade seems untroubled by this development!

     The trend for wheat remains range-bound and seems likely to be so until there is a significant development. Potential Chinese wheat buying, always a chimera in global markets, is in the coffee-talk, at least for the moment. There are rumblings of crop difficulties there. Then of course there is the “tariff parade”.

     There is reason to follow this market closely. When the market ignores stats in the first hours of trade after a report, the reality often bleeds through and shows price support later.

     Stay tuned, as there is always more to come.

PS: DUBAI, United Arab Emirates (AP) — Israel attacked Iran's capital early Friday in strikes that targeted the country's nuclear program and killed at least two top military officers, raising the potential for an all-out war between the two bitter Middle East adversaries. It appeared to be the most significant attack Iran has faced since its 1980s war with Iraq.

Market Bullets® Thursday, June 12, 2025: Pre-Dawn

     Thursday, June 12, 2025 World Ag Supply/Demand Estimates (WASDE) will be released at 9:00 AM PDT / 11:00 AM Central.

     Various trade analysts are putting up pre-WASDE guesses about old-crop wheat ending stocks for all wheat that average about 842 million bushels, compared to 841 million last month.  Pre-report new crop ideas are averaging 924 million bushels, just one (1) million up from last month’s USDA figure. The immediate effect of these trade estimates on prices immediately after the official new figures are released is to create upward pressure if the guesses are too large and downward if too small. The price effects are usually temporary, but can be profound if the trade is surprised. By 9:30 AM Pacific Daylight Time on Thursday morning the market will have absorbed most of the new data and taken action. Meanwhile, many traders and other decisionmakers are in waiting mode.  

     The House-Passed Reconciliation Bill has a long way to go at the Senate, then there will be a reconciliation conference after that. The Farm Bill will come later.

     The U.S. Dollar Index is nearing a one-year low. Since the end of February the Index has declined about 9.33% in value versus other currencies, a domestic inflationary effect, but U.S. export are more competitive as a result. The Index does not include the effects of the Chinese Yuan or many of the Pacific Rim currencies of countries likely to buy wheat.   

     Depending on market reaction, we may provide a commentary after the WASDE.

     Stay on the trail, the wheat market is bound to deliver opportunities that must be seen to be taken. Good hunting!

Market Bullets® Friday, June 6, 2025: Close

     COT report released Friday as of June 3 positions. Small changes in net short-sold positions in Chicago and KC – still historically large.

     Diesel is up to a high dating back to May 12, a 13½ cent per gallon gain from that intermediate low. The main trend in Diesel is still contained in a wide negative-slope channel, with a high side right at the current trading level. Interesting week coming up.

     Box-o-Rox showing “Hold Incremental Sales” on confirmed 13-cent break above the moving average.

     Wheat prices ended the week strongly positive, plus-20 in Chicago Soft Red Winter (SRW) July contracts, up 17 in KC Hard Red Winter (HRW) and up 10 in Minneapolis Hard Red Spring (HRS). PNW/Portland white wheat recovered from a slight dip to settle unchanged on the week.

     Chicago as the leader failed to break out above above the April 11 and May 21 twin peaks at $5.57, settling less than 3 cents below that challenge.

The trend has been positive since May 13 and has gained about 50 cents in that time. HRS is the only futures contract to rise above the April level, mostly based on less-than-optimum condition and need for moisture.

     The next week ending on June 13 will be technically intense. If the Chicago contract can close decisively above its technical resistance level, it will complete a “1-2-3” reversal, an old-school pattern that is relatively reliable.

     The challenge for a marketer is that we are near enough to the top end of the range to make an “opportunistic” sale based on that range, but our BoR indicator is flashing a “Hold”. It may pay to be watching a little closer now.

     Stay tuned for the next chapter in the saga.  

Market Bullets® Friday, June 6, 2025: Pre-Dawn

     What would you do if you were on the buying side of the equation? Would you load up? The buying group is at a space in the market in which they already have “loaded up”, so the enthusiasm for taking on more is at a low. Importers are feeling no pressure to change their pattern by extending receiving dates much farther than they already have.

Word has it that Russia had removed their minimum price rules (around $250 per metric tonne). They want to clear out some old crop, but the trade expects this (not startling) announcement will have very limited effect on movement of Russian wheat.

     The weather forecast for the Hard Red Winter (HRW) wheat harvest may be slowed by rain. This is not likely to move the price much, although the market is seeking reasons to buy. It just is not that unusual in early harvest to have a rain-day or two…just change oil, blow out the air filters and tighten the chains a notch and put a new sparkplug in the fuel truck pump. Take a nap (I always did like the smell of rain at 4:00 AM during harvest).

     The spring wheat crop is lagging. It is still early to declare big trouble, but the overall health of the 5-state spring wheat crop is shaky. We will  watch the inter-market spreads for confirmation that the trade believes there is trouble in the Dakotas and Canada.

     The export market is slow. Weekly new crop sales came out at 449,100 metric tonnes versus 711,400 last week (see first paragraph).

     PNW white wheat price basis (Portland white wheat minus Chicago Soft Red Winter (SRW)) has declined 30 cents per bushel since mid-May on flat to steady SRW and slow movement of Soft White. When Chicago gains on white wheat by doing nothing, it is the definition of a dull market.

     The trend in Chicago is slightly positive for the second attempt to challenge the old late March highs at $5.75, about 35 cents above pre-dawn trade on Friday. That is quite a stretch from here without a new piece of data. It is near time to take another incremental slice of wheat sales.

     Stay tuned, changes may come quickly.       

Market Bullets® Thursday, June 5, 2025: Pre-Dawn

     The international markets are in a granular, incremental, cautious period. There are developments in several key ag markets, but all backgrounders. Interest rates are slowly declining in the 2-Year Treasury Note market, a pattern that can be interpreted as a declining risk environment, with money moving toward equities and other more aggressive investment sectors. For wheat that is a generally positive piece, as acquiring, shipping and processing are all generally unimpeded (for the moment).

     The Chinese Yuan in U.S. Dollar terms has  - once again – turned stronger (negative on the chart) toward fewer Yuan per USD, below a long term flat top formation in place since 2022 (the top end of a “managed” value).

     Meanwhile the Russian Ruble has paused in a rapidly strengthening move against the Yuan that started in January, making Russian wheat more expensive to the Chinese.

     The currency moves are indirect and not as powerful in influence as weather or government machinations, but they are a factor to watch. These short-term Yuan and Ruble actions are a very mild wheat price-positive.

     Diesel remains in a very broad downward channel, with OPEC opening the taps for a bit more production. Putin is a heavy, but behind-the-scenes influence on OPEC+, as he seems to prefer to let the House of Saud, et al lead the headlines. The energy markets are watching to see if the U.S. will expand production. Break-even prices for new Permian wells are said to be $65-$70, and smaller shale producers need at least $60 to justify costs. With recent trade in the low $60’s for West Texas Intermediate, the incentive to aggressively expand U.S. crude oil production is limited. There is fuel cost pressure on wheat production, but the current wheat market is not sensitive to this factor right now – just the cost of farming! – Watch for the phrase “biofuel policy” in coming weeks.

     Wheat prices rally potential is likely to be limited due to accelerating northern hemisphere harvest unless there is a massive adverse weather shift.

     The wheat price trend is neutral, in an approximately a 50-cent range. “Box-o-Rox” status is “Continue to be caught-up on incremental sales.” Option values are tradable, so do the math and practice “thought experiments” to improve understanding of this valuable market. It takes a bit of time to become intuitive about the language and risk/reward curves, but it can pay off in a marketing plan over time. Meanwhile…

     Stay tuned, the change is gonna come. It’s trackable!  

Market Bullets® Wednesday, June 4, 2025: Pre-Dawn

     When the wheat market gets tangle-footed over a 2% change in estimates, it has become very sensitive. The winter wheat crop condition estimates as of June 1 improved by such a margin, rising to 52% good-to-excellent (GEx), just as it dropped by the same amount last week. With nearly nothing to bite on in the news wires, we get a little over-focused on these incremental guesses.

     The PNW winter wheat crop was reported Monday with WA at 75% GEx a drop of 2%, OR at 61% was up 1% and ID showed 79%, a plus-4% week.

     Harvest in TX is at 25% versus 27% normal. The headers are turning on schedule.

     Spring wheat condition for the second week of reporting for this crop year is 45% GEx compared to 74% last year. WA reports at 59% and ID at 69%.

There are no serious overall threats to this crop at this point, leaving the market thirsting for tradable data.

     Ukraine and Russia will continue to bite and claw at each other. The so-called “Trade War” that is thrashed every day in the mainstream media seems steady as far as an outsider can perceive. There is nearly no impact on global wheat trade movement so far. Another empty bowl for traders seeking news nourishment.

     The charts are revealing only a narrow range of prices over the last 26 trading sessions since the end of April, about 50 cents from low to high in Chicago Soft Red Winter (SRW) with no definable slope. KC Hard Red Winter (HRW) Wheat has an 80-cent range, and Minneapolis Hard Red Spring (HRS) shows 55 cents, but with just a bit more enthusiasm than the other two exchange-traded wheat futures contracts. PNW wheat is stable around 5-10 cent variation.

     A 50-cent range from high to low is a challenge to us marketers. Just about the time the range boundaries start to seem inevitable, the pattern changes. It is a test of patience, and of discipline in making incremental sales on schedule, when it seems obvious the market is at a long-term low. When this perception becomes overwhelming, it still makes sense to cut exposure to stored wheat, with its expenses. This is when it becomes sensible to examine a re-buy strategy with your merchant, but not directly on the heels of a reluctant sale. It is for when the market actually awakens and begins to trend. It won’t be hard to see when that happens, it just is not yet.

So we hide and watch.

     The trend is neutral. Watch the Box-o-Rox and practice reading the call and put options tables.

Stay tuned.

Market Bullets® Tuesday, June 3, 2025: Pre-Dawn

Without any shift in the wind there is no need to change tack.  When there is no news worth reporting it is not our practice to comment for the sake of commenting.  If you have been paying attention to the lecture and you have a decent notion of the intermediate and long term trends then any additional analysis can actually interfere with making enlightened decisions on trades.   Marketbullets LLC is an endeavor to save you time, not waste it.  As always we keep the charts fresh.

Market Bullets® MONDAY, June 2, 2025: Pre-Dawn

Wheat trading quietly sideways. No new significant influences in the wide world of wheat. Full market comment available after the close.

Market Bullets® Friday, May 30, 2025: Pre-Dawn

     Paris 11% dry milling wheat printed a new. 1-year low on Thursday. It is not a powerful, unequivocal shot…just -€.75 (about -$0.023 cents per bushel equivalent), but a break below the 18-session series since May 5th. The Paris wheat contract has been increasingly effective as a global wheat discovery point, taking into account the absence of any Black Sea public indicator of wheat values since 2022. This little break is not a sell signal, but must be noted. It is no surprise that the global wheat price arena is sagging under the weight of expanding production figures from many sources.  – very early trading on Friday indicated a gain of €.75 per metric tonne, washing out Thursday’s loss (bearing in mind that this is microscopic analysis).

     Friday morning early trade is showing Chicago up about 3½ cents, around $5.37½ in July contracts. Minneapolis spring wheat futures were strong on Thursday. Friday had July HRS up about 7½, mostly on 45% good-to-excellent ratings from USDA on Tuesday, a bit lower strength than anticipated by the trade, although it is still very early in the season to predict results.

     The week-to-date for Chicago wheat July contracts is about minus 5 cents heading into Friday’s day session. Minneapolis is up 9 for its week with Friday to go, while KC Hard Red Winter (HRW) is down about 2¼.

There is no reliable short-term trend upon which to rest a trade decision as of Friday early AM. The bottom is perilously close. It will pay to watch that low if you have wheat on the table for sale. If it breaks below the $5.22 line in the July contract, consider it a warning!

     Stay tuned here. We will be watching for a useful indication of change in the price pattern.         

Market Bullets® Thursday, May 29, 2025: Pre-Dawn

     The wheat market is sitting in idle, and there is nobody in the cab. Probably went for coffee and was afraid that if it was not left running, the battery would be too weak to start again. Anyway, staring at the wheat plants and straining for them to grow is probably not good for the digestion. So it’s back to the shop for a touch up on the brushhog or to rotate the pickup tires.

     Most major global wheat production regions have received at least some rain over the last 3 weeks. There are many areas still in drought, but the size and number of these is shrinking slowly. The wheat trade is not seeing any looming moisture issues large enough to move wheat prices for more than a day or two.

The global currency markets are stable. The Russian Ruble continues to gain ground versus the Dollar and Yuan. The U.S. Dollar Index is up about .42% for the month of May-to-date, although in a clearly defined downward trend that started back in January. Part of the Dollar weakness is based on soft interest rates in the Treasury market, Fed or no Fed. The financial environment is a bit “squishy” with the Tariff Parade bogged down by Federal court rulings and delays. This is not a price negative market element, but we consider it to portray a market near equilibrium, without mandate.

     Private Russian analyst SovEcon raised their 2025/26 Russian wheat export estimate from 39.7 to 40.8 million metric tonnes.

     India’s farm ministry is estimating their new wheat crop at a record 117.5 million metric tonnes, up from 115.4 million in their March report. India is occasionally able to export wheat in such years.

     European soft wheat production is expected to increase by about 13% over last year.

     The market is still acting weak, but has not created any new patterns or threats. Its trading near some long-term lows that have held for many months, a characteristic of a chart bottom that if broken down would set up capitulation selling. There is no reason to expect this now, but that line is a key decision point for many traders and deserves close observation. Harvest is near, and the market smells it.

     This is trackable, even when its dull. Let’s track it!

Market Bullets® Wednesday, May 28, 2025: Pre-Dawn

     The wheat market as portrayed by Chicago futures had begun a slide back toward the recent lows, but USDA’s Crop Progress Report released Tuesday provided a little braking. Last week and again this week, the U.S. winter wheat crop was rated lower by an overall 2% in health versus the previous week, surprising the trade and helping to trigger a price run that ran right up to the challenge price at $5.57 (but did not break out). Now for the second week in a row, the Progress report has shown a -2% in crop condition, this time helping to staunch the bleed-off of the short-covering gains from last Tuesday’s rally. 

     This kind of micro-calibration of the market each day is something we probably should get used to, as the macro-factors with the power to move the market to new levels are not shifting at present.

     The spring season often has a volatile character, but this year we have been bottom-fishing in a weedy lake. The pattern for wheat is sideways, with some occasional disturbance, mostly based on large money-fund movement. The test of marketer’s patience is severe. Global wheat consumers look out into the market and do not see any reason to stress about wheat procurement.

     “Opportunistic” marketing means close monitoring to capture 20-50 cents more per incremental sale, all while monitoring the low side of the range for price break-downs that push us toward accelerated sales.

     The current Box-o-Rox (BoR) indicator is for “complete incremental sales as planned”.

Stay tuned. It’s trackable.  

Market Bullets® Tuesday, May 27, 2025: Pre-Dawn

     The southern plains wheat states have abundant rain in their forecast for the next 6-10 days. Although the Hard Red Winter wheat production in Texas, Oklahoma, Nebraska, Kansas and Colorado have suffered from short moisture in the last couple of years, they have seen some improvement in crop harvest prospects in the last few weeks. This upcoming rain cycle may be almost too late to make a large difference in the lower tier, and some areas may receive too much, with 3-5 inches possible. The market will likely take note and watch for damage. What might have been a threat to prices based on possible crop improvement may be less so at this stage. Heat is needed now to increase the crop.

     Argentina, after many years absent from the competitive wheat export arena due to their government policies, is about to re-emerge as an aggressive source of wheat in the southern hemisphere. There was a time when they dominated the winter phase of the global wheat export.  After being invited to join the nascent “BRICS” global economic group in August 2023, the new Argentine government under President Javier Milei formally withdrew from the application process on December 29, 2023, stating that they will; not consider joining BRICS appropriate.This decision was a policy reversal from the previous government and was driven by Milei's shift towards closer ties with the West and his criticisms of China and Russia. 

     France’s AgriMer is estimating 71% of their soft wheat crop is rated good-to-excellent condition through May 19, a 2% reduction in health from last week, and still quite a bit better than last year at this point.

     The U.S. domestic wheat trade saw a healthy price pop last week, due apparently mostly to short-covering (Buying back previously sold contracts) by large money speculative funds. There was also an increase in cash wheat sales, as opportunistic marketers look to clear out last year’s remaining crop ahead of harvest, and in a market that had been moribund-flat for many weeks. The technical trade noticed that even with the strong performance, an important confirmation level at about $5.57 in Chicago July contracts was not achieved, leaving the market in limbo/weak going into the new week. At 3:30 AM Pacific Time (UTC-7), Chicago was down about 9 cents at about $5.33½…showing an absence of buyer interest. This week may be volatile, especially if the funds decide to do another tranche of buying, which may support the brand-new upward bias, but for the moment it looks like another test of the low side is imminent.

     Stay tuned.

Market Bullets® Friday, May 23, 2025: Dawn

     The price of wheat has given us a new squiggle on the charts. We are now at the second stage of a potential confirmation of change from a flat or negative price pattern, in which the buyers are encouraged and the sellers are nervous for the first time since February. The market structure is different today compared to that late winter rally. The Commitment of Traders (COT) showed the large speculatives coming up from a net short of about 91,000 contracts in Chicago. The most recent report shows that net short to be 118,000, although the recent 30-cent pop will probably reveal some reduction of that this week. There is still quite a bit of powder in that keg, but we do not know if there is enough general anxiety to push the fund managers into continuing to reduce exposure to their historically large short-sold positions.

     The challenge price for Chicago July futures to prove that there may be a new breeze blowing in the wheat complex is about $5.57, 17-18 cents above early trade Friday morning. (look up “Sukhovey”)

     The Global wheat markets have been remarkably stable amidst all of the tariff parade and other political stuff. We did miss what had to be one of the most blatant political moves by China as they bought some 400,000 to 500,000 metric tonnes of Canadian and Australian wheat, announced on May 9th. This is not a shocking or unusual set of transactions. It’s just the timing that is elegantly pointed at the U.S. during tariff talks. The key to remember is that China is struggling with crop shrinkage due to early heat. Any wheat buying in the global market is healthy for global prices, especially when it has not been assumed by the statisticians.

     The wheat markets are more volatile and jittery, making option prices expand a bit. Good for some option strategies (spreads) and less good for some (Outright buyers). Keep doing the math and watching the spreads, it’s a healthy exercise. Take a look at our “Calender wheat spreads” page.

     Chicago July wheat futures are doing a little tap dance around the Box-o-Rox (BoR) green line on the daily chart, standing just a few cents above the BoR, which keeps the “hold incremental sales” light on. So far there have been three (3) daily closing prices above, and Friday’s close will make the 4th, as well as the weekly, boosting confidence in the hold indicator.

     We need a little more to begin to get excited, like a solid close above that challenge line at $5.57 or higher.

     Stay tuned. The weekly close will tell a decent, if small story. “Opportunistic” marketing bears a strong resemblance to “Speculative Trading”, although it is not quite the same. That is one of the benefits of incremental sales…it allows patience with small, new-born uptrends.

Market Bullets® Thursday, May 22, 2025: Pre-Dawn

     The Russian Ruble is at its strongest international trading rate since May of 2023. The effect of this gradual change is mostly to make it easier for Russia to purchase war materials and to somewhat improve their standard of living. The pressure that Putin had been feeling from an extremely weak Ruble has abated. It begins to look more certain that he will be in control of Ukraine’s economy at some point soon, consolidating his gains in ability to control global wheat prices.

     The northern hemisphere wheat crop condition is stable, if not continually improving in health. The trade reaction to the recent rally has been to blame the short-covering on the appearance that the crop is vulnerable to adverse weather, including excessive moisture. The seasonal tendency now is for the temperatures to rise and for rain to taper off. Most of the subsoil moisture deficits across Hard Red Winter (HRW) wheat country have been overcome. Some of the southern districts of Russia are still weak and dry, but the size of the damaged area is smaller. In order for this overall factor to become the driver for the hoped-for price rally in the wheat complex, there will have to be some extreme heat. We shall see…

     The short-term charts are much safer looking than they were just a week ago. Technically there is no strong buy signal, only a contra-trend pop driven by some sensible trimming of massive historical short-sold positions by trading funds. Against-the-trend rallies are fickle, often sharp and violent, with no easily evaluated time frame. Now is the time for that black swan to settle onto the pond!

     There is an opportunity now to make incremental sales to capture some of the recent run. The big trendline is still negative, but the Chicago daily charts shows the current price right on top of the 60-day moving average we call the “Box-o-Rox” indicator. The next couple of days should resolve the froth and give a better picture, meanwhile remain skeptical!

Stay tuned.

Market Bullets® Tuesday, May 20, 2025: Close

     There was short-covering in the market Tuesday. You can pick whatever reason that seems best to you…a 2% slip in overall U.S. winter wheat crop conditions, a slightly weaker U.S. Dollar Index, “excessive” moisture on some winter wheat and some corn…None of these are powerful reasons to rally 12-20 cents across the wheat complex, including Paris milling wheat futures. The herd was on the move, probably trimming some of the edges of the massive net short-sold positions that had accumulated in futures across the board.

     Our Box-o-Rox indicator is now in “hold sales” status. A confirmation of that indictor is a trend-change factor. The trade will be inclined to view the surge in wheat prices with suspicion, since there is little in the way of fundamental or headline support. We are in the hands of the fund managers for the moment. At least it is positive in pattern.

Stay tuned.

Market Bullets® Tuesday, May 20, 2025: Dawn

      Memorial Day, May 26th, 2025 is a a day to honor and mourn those who died in U.S. military service. Many families take the day to remember honored ancestors.

      Wheat futures trading (and most other U.S. domestic exchange-traded contracts) will be closed. Trading will resume Tuesday morning.

     Excessive moisture in wide midwestern and southeastern corn and wheat states are triggering talk of potential quality issues. In the past, “rain makes grain” has been the conclusion of similar periods of heavy moisture. Russian winter wheat areas have also received measurable rains. The next weather phase will be heat, then we will measure some of the crop issues. For the moment, the stress on the U.S. winter wheat and corn crops is under observation, providing only a little support (not a rally force) for wheat prices.

     USDA’s National Ag Statistics Service (NASS) Winter wheat condition report in the PNW states as of May 18th showed a gain overall, with WA at 78% Good-to-Excellent (GeX), unch on the week. OR showed 61% GeX, +4%, while ID put up 70%, +8%.

     Oklahoma, a Hard Red Winter production state, was at 42% Gex in the April 6th condition report, but this week showed 56% GeX. TX has gone from 26% up to 32% GeX, KS dropped from 51% to 49% this week, while NE has suffered a sharp drop from 37% to 28%. The bag is mixed, but overall improved condition for HRW.

     The overall winter wheat rating for U.S. winter wheat was spotted at 52% GeX, -2% versus last year’s 49%.

     The wheat charts are showing a little bit of life, as Tuesday’s early AM trade has Chicago Soft Red Winter (SRW) up about a dime at 4:11 AM Pacific Daylight Time (UTC-7). KC HRW was up 11, and Minneapolis HRS was 6-7 cents. Paris 11% dry milling wheat was indicating 6-7 cents per bushel equivalent.

Chicago’s front futures month (July) is trading within a dime of the Box-o-Rox 60-day indicator, the first time it has been within striking distance of a “hold sales” status, not yet a trend, but at least a sign of life. The only tangible price-positive factors on the table are “potential” quality damage in SRW and some HRW states, and a global market that is functioning without heavy Russian wheat sales activity.

      Can’t yet call any uptrend, but we have to start somewhere!

Stay tuned for more.

 Market Bullets® Monday, May 19, 2025: Pre-Dawn

     There are some indications of Australian crop drought – According to Clear Grain Exchange, an Australian grain order matching program, “Dry conditions remain in many areas and domestic end-users are bidding up to match grower target prices.” https://www.cleargrain.com.au/

     Solid data on Russian wheat production in the upcoming northern hemisphere harvest season remains elusive. There are some reporting a winter wheat crop in “good and satisfactory” condition although the sources are subject to question, while others point at the poor condition of last fall’s winter wheat crop emergence, with some sources now suggesting the crop is in its worst shape in decades.

     The statistical trend is for “big crops to get bigger”, an old wheat market aphorism. The crop size is still quite a ways from being “made”, but the general health of the northern hemisphere crop seems to be OK, which tends to keep a lid on rallies.

     The “street” is beginning to talk about buying wheat. Still scattered, but looking to buy at some point. If the wheat market gets a hint of China buying, or of virtually any net positive wheat factor increasing, it may light up the funds, triggering a short-covering pop, which may very quickly define a longer-term seasonal low. There is reason to be patient, but prepared to adjust. With the massive net shorts in the hands of the funds in Chicago and KC, it would not take much.

     Next change in weather to anticipate is an increase in heat…Duh!

This is trackable. Let’s track it!

Market Bullets® Friday, May 16, 2025: Dawn

Diesel prices pulling back, now trading $2.08 per gallon for a 40,000 gallon contract delivered NY Harbor.

On day two of the Kansas Wheat Quality Tour, scouts estimated yields in southwest Kansas at 53.3 bushels per acre, up from 42.4 last year and well above the 42.3 average. The Tour concluded on Thursday, with the average for the tour at 53 bushel per acre, a 4 year high for the Tour.  

No changes in trend or dominant factors this week. The wheat market is moving physical wheat at a pace and volume that addresses the needs of anyone who needs wheat. There are bargain hunters attempting to buy wheat at the low of the year without knowing if it is indeed the low.

In the long history of wheat speculation, this meets the criteria of a significant point in price movement patterns. If unlimited capital is available to meet margin calls, this looks like a place to buy some wheat, but that success of the cumulative position strategy depends on always being able to buy more, a condition that screens out most of us.

The overall bullishness of the macro markets seems about to grow. That may be enough to allow wheat prices to give us one or several marketable rallies, but harvest is likely to keep the brakes on the price.

Steady as she goes, helmsman!

Market Bullets® Thursday, May 15, 2025: Pre-Dawn

     Trump was being polite when he accepted the plane from Qatar. It was not given to him, it was gifted to the U.S. It is also highly unlikely that it will ever be used for presidential transport, as there are many other purposes for which it can be used. It is considered an insult not to accept such a gift in many cultures, particularly in the Middle East.

     The wheat market is about as dull as it ever gets. When is the best time to buy anything?..When no-one seems to care, as it just looks stupid.  

Using the long-term Monthly Chicago Wheat chart:

     The long-term technical downside potential for wheat from current trading at $5.22 is about -$.50 to -$1.36, between $4.71-$3.86 per bushel in the lead Chicago contract. That range is a match for the lows during 2016-2020 on that long-term monthly chart. Bearing in mind that there is Always one or more downside targets visible, most of which never come to pass. The confluence of events and fundamentals that would lead to that kind of decline from the current price is not impossible.

What were we doing in 2016-2020? What is our real BreakEven price per bushel? How much has it increased since those years? Can we reduce that BE? What are my options for marketing at this level, e.g. loan, sell flat price and wait for buy signal to re-buy, hedge to arrive, option spreads…some of these may require the support of your financial institution. The wheat market will bounce. It always does. Could it be another year or more? Yes. Having at least the outline of a plan for marketing in that environment could save a lot of stress and hassle.

     Now the long-term upside, even if it seems far away. Using the lowest of those nasty low-end targets as a base, the first natural upward retracement for Chicago front month wheat contracts is about $7.22, about $2.00/bushel above today’s market. The challenge between is about $6.17 (the high printed a year ago), about +$.95. There are more above that, but the $1.00-$2.00 target will do to go on with.

     So, trying to be conservative about the measurement we are looking at a range of -$1.50 downside to +$2.00 upside potentially over the next 1-2 years. It’s a broad brush. Making trading decisions using monthly charts is a challenge, but it is a good planning tool. Being thoughtfully prepared for possible adjustments in operations and marketing strategies is worth its weight in sleep.

     We have not failed yet. The market is still honoring those heavy pysch lines, like $5.00 for example. It is entirely possible that the price of wheat will climb enough to make good opportunities for sales this season, but those captures will require regular monitoring of the patterns and tone…and a plan.  

It’s trackable. Let’s track it!      

Market Bullets® Wednesday, May 14, 2025: Pre-Dawn

     First test passed! Chicago wheat managed to close well above its long-term lows on Tuesday, bouncing 11 cents to close positive, but that may be the only candle in the window. There are no fundamental issues anywhere large enough to move wheat prices up more than a few cents.

     It is a curious circumstance in which USDA has projected average corn yields at 181 Bu/acre, when that total has never been hit before. Calculators across the corn belt are showing that it will take near perfect weather to achieve this yield, which puts the USDA in the odd position of forecasting the weather based on projected corn yield. It seems that market behavior will ebb and flow with each week’s weather, and the seriously sensitive period has yet to begin.

     The tariff parade is marching in place, halted at the corner of main and Who’s on First to play the national anthems of both China and the U.S. for your entertainment. At least the corn-dog man is making sales and the pom-pom girls are handing out “Made in China” kazoos as fast as they can. It’s a great time to be alive!

     This market will provide some opportunities for wheat marketing, but they will likely be rapid and discontinuous. The rules have not changed. The Box-o-Rox Indicator has a bright “continue to make incremental sales” light on the board. The trend is negative since the breakdown of the last 6-months sideways channel, back at $5.25 in Chicago July futures, but the price is low enough now that cash sales from the country are slow, with producers suffering from FOMO (Fear of Missing Out) based on what really appears to be a chart low with rally to follow. Normal seasonal volatility will be pure torture to anyone with exposed wheat in the bin. Don’t let the whipsaw getcha!

     Make the sales on schedule. Prepare any appropriate speculative re-buy tactics in advance, but keep the safety on until there is something rational with which to trigger them. There is going to be lots of wheat for sale in July through September.

Stay tuned.  

Market Bullets® Tuesday, May 13, 2025: Pre-Dawn

     The World Ag Supply/Demand Estimates (WASDE) on Monday were not friendly for wheat, as the new crop production estimate was advanced to 1.921 billion bushels, stronger than the average pre-report guess. Global wheat ending stocks were increased slightly to 265.21 million metric tonnes, a 4.51 million tonne, +1.71% rise. There were no price-positive stats in the wheat package.   

     The winter wheat Crop Condition reports showed the U.S. 18-State average condition at 54%, +1 from last week. WA winter wheat tallied 78% Good-to-Excellent (GEx), unch from last week, and OR is dropped 6% to 57% GEx. ID shows 62% GEx, down 3% from last week. The winter wheat crop condition improvement over the last month accounts for much of the change in production that showed in the WASDE.

     You don’t have to be undefeated to win the Superbowl (One (1) team – the Miami Dolphins in 1972 had a 17-game perfect season – Larry Csonka, what a beast!). The same goes for the World Series – No World Series winner has ever been undefeated in the Major League Baseball season. In 86 years of the NCAA Basketball Division Championship, only seven NCAA teams have completed an undefeated season and then taken the trophy. No NBA team has had a perfect season going into the Championship.

     Wheat marketing or trading is a job of probabilities. Trading in the direction of an established trend is undeniably the best way to increase the odds of profitable decisions, just as trading against the trend is a powerful way to decrease the chances of success. Holding wheat in the bin against the trend is a very risky and expensive way to speculate. It is far better to limit cash wheat exposure by liquidation or other explicit coverage through a planned incremental liquidation or directly applied hedge strategies, and then to use the “paper” markets to re-enter the market if speculation is appropriate given financial strength and operator knowledge.

     We are now perilously near multi-year, long-term lows in wheat prices. If the current downward trend is strong enough to penetrate and confirm new lows, the ability to measure market risk becomes profoundly more difficult…except for merely following the trend, while avoiding holding or extending ownership against the trend. Harvest is coming, trend or no trend, making wheat producers inherently “long” wheat into the future. The job of selling that production is one of controlling exposure; being slow to sell in an uptrend, and quick to sell in a downtrend (the exact opposite behavior from what most ordinary mortals seem wired to do).

     There is but one choice for the producer: to sell or not to sell.

     Tuesday early AM trade (4:00 AM Pacific Daylight Time (UTC-7) had Chicago wheat down 8 cents, within 3 cents of its recent long-term low on April 29 at $5.05. The next key low is at $4.93 dating back to mid-August of 2020, 4 years and 7 months ago. The downward roll is gaining momentum, having defeated the 6-month-old sideways range lows that had held since last November, even though the funds are near all-time large net short-sold positions in Chicago and KC. The market tone is one of capitulation among long-standing holders of long wheat positions. A confirmation of penetration below $4.93 on a closing basis (multiple session closing settlements below that price) will stimulate sellers and discourage buyers, a recipe for lower lows. Every low has the potential to be “The Low”, but the only way to credibly identify that low is after the fact. The overwhelming propensity is for new lows to be followed by more new lows. When a trend is as old and powerful at the one now driving the market, it takes time and consolidation to create the conditions for a new upward trend to emerge.

     It costs 3-5 cents or more per month in storage, interest and opportunity costs to keep wheat in the bin. Six months of storage cost at least $.18 to $.30 per bushel. A year is $.36 to $.60, a honking big hit to have to overcome just to break even.

     Cutting your exposure, even incrementally over time, in both old and new crop is never a bad policy, and during a wicked downward price trend, it is essential! Buy it back when the worm turns if you must speculate, but speculating with stored wheat can be spectacularly expensive. Use the alternatives to physical ownership, but only when the trend conditions are in your favor! Call your merchant. Make a detailed plan for this tactical set. Doing so will reduce stress and clarify your actions later.

The market is testing low prices, and our psych. Let’s track it and act on that.          

Stay tuned.

Market Bullets® Friday, May 9, 2025: Weekly Close & Early Monday Perspective

     Chicago July wheat futures dropped 9 cents in the first 90 minutes of trade in Friday’s day-session. If you must have a reason for that; “There were more sellers than buyers.” Good wheat moisture in the winter wheat states? Yes. Good corn seeding progress for the week and good moisture to with it? Yes. Indication of Russian problems with their wheat crop? None. KC Hard Red Winter (HRW) wheat at new 4.6-year low? Yup.

     Even though Paris Milling wheat futures hit a new daily low -€.25 per metric tonne (less than $.01 cent per bushel) below the last 5-day series lows, it counts as a quad low, kinda rare as patterns go. The contract finished the day up from that low, forcing us to apply confirmation bias to declare a bottom pattern. Can you buy this? I would not, but there are some who will. The market is clearly seeking to build a little chart base, but it’s at the wrong end of harvest season without some supply problem on which to hang a hat. That makes two major global milling wheat pricing sources (KC and Paris) that have very negative implications in their charts over the last couple of weeks, mostly based on significant improvements in growing conditions, leaving us with almost nothing upon which to lean for a fundamental price support concept in wheat.  

     For Paris milling wheat, a purely technical, upward reaction in proportion to the magnitude of the decline from February to current calculates to a 1st retracement upward target around €223.75, up €21 per metric tonne from Friday’s €202.75 close in Paris. The potential downside is open to €196 - €176 per tonne, last traded in 2020-21.

     For KC Hard Red Winter (HRW) that same calculation is about $5.61 (+$.44 above current), with a long-term downside between but there is no buy signal on the charts.

     Those who cannot resist buying here may end up looking like a genius, or NOT. We have never found the contra-trend, bottom picking style of trading to be anywhere near viable. It’s too much like flipping a coin. It is far better to give up some of the upside to confirm a change in trend before adding market risk, but even then, on any first upward shot from long-term lows, it’s contra-trend and high-hazard. Patience, Precious! Wait for at least a 1-2-3 reversal pattern or crossover or anything but guts!

     We start out the week with Chicago wheat trading unchanged at 5:00 AM Monday. KC Hard Red Winter (HRW) wheat futures up 2, MPLS Hard Red Spring (HRS) down 2 as Paris 11% milling wheat indicated a positive 6 cents per bushel.

Some relief for the wider markets as negotiators agreed on a 90-day cooling period for China and U.S. tariffs. Engagement here is the key. There should be some expectations for gains on both sides and a setting up of later actions. Meanwhile, the world markets will continue as usual. In the wheat arena there are open doors for more trade, whether that is token purchases by China or a better focus on other issues. On the whole, the environment is stable for now.

     The trend is sideways. Let’s watch the channel boundaries for signals.

Market Bullets® Thursday, May 8, 2025: Pre-Dawn

     Current Old-crop U.S. wheat sales year-to-date are at 96% of total projected. The World Ag Supply/Demand Estimates coming out on Monday morning, May 12th will be tightened up as we come into the last 54 calendar days of the crop-year ending June 30th. New-crop wheat export sales (2025-26) are running 19% ahead of the previous year.   

     If China needs wheat in the new crop year and they choose to buy it from other sources, it will still shift the global supply/demand balance and likely improve prices overall. If they do not need wheat, the impact of any tariffs on wheat trade with China will be nearly imperceptible.  

     Looking down the long-term road, there is no way to avoid the wheat production acreage increase that is likely to emerge from any cease-fire in Ukraine. Both Russia and Ukraine will strive to increase wheat exports in the foreseeable future, and both will be price-setters for most of Eurasia and the global south. The structure and practices of global wheat trade will likely shift in response to the BRICs plan to establish a new global exchange, although it may be a while before their new exchange is fully established. Many things may change before then. An October 2024 article by the Council on Foreign Relations summarizes the broad outlines of the emerging pattern of global wheat trade. https://www.cfr.org/blog/why-expanded-brics-backing-russia-initiated-grain-exchange   

BRICS Nations:

• Original Members: Brazil, Russia, India, China, South Africa 

• New Members (2024): Egypt, Ethiopia, Iran, United Arab Emirates (UAE) 

• Other Interested/Partner Countries: Saudi Arabia, Indonesia, Argentina (initially invited, but later declined), and others 

         The expanded BRICS nations could represent around 33% of global wheat exports. The BRICS and expanded BRICS nations represent a significant portion of global wheat demand, potentially between 40% and 47% of global wheat consumption. This organization is no joke. If we intend to be aware of the global wheat markets (and more), it makes sense to allocate a little time toward monitoring what the BRICS Boys are up to. Additional reading <here>.

     The big picture for wheat demand is shifting. Tracking the developments of this potentially very influential global entity will be essential. For example: “BRICs Chain” crypto currency values and validity.  

Meanwhile, back at the ranch…Chicago wheat futures at 3:00 AM PDT Thursday morning May 8th were trading up 3½ cents at $5.36, KC was +4½, MPLS up 4 and Paris 11% Milling up 1½ cents per bushel equivalent. The market is presently set in “hide and watch” mode, for new WASDE numbers and for tariff “deals”, so a narrow range and a few quick moves based on incremental money fund movements is what we must expect. This is the time to be paying some attention, with the charts hovering too near long-term lows for comfort, as a failure to hold above the sensitive $5.05 to $4.93 low in our bellwether market, Chicago Soft Red Winter (SRW) wheat  futures.

     The trend is sideways in a well-defined channel. There are reasons to be patient, but the “make sales on schedule” light is still lit on the Box-o-Rox chart.

Stay on track. Stay on plan. Watch the charts.         

Market Bullets® Wednesday, May 7, 2025: Pre-Dawn

     Chicago Wheat futures are bumping up to the 38.2% retrace line, a familiar ratio level that represents a minimum bounce back toward highs. Current trading is 66 cents below February’s 2025 most recent highs.

     Russia's IKAR has raised their wheat production expectations from 82.5 million metric tonnes to 83.8 million. Every day passing now is critical for northern hemisphere wheat crop development (including Russia and China), but soon we will begin to taper the risk of crop damage, as the first trucks will cross the scales in the southern U.S. within 2-3 weeks. 39% of the U.S. winter wheat crop is now headed.

     The pattern of wheat prices is not deviating . The sideways channel remains intact. Watch for breakouts. Sell incremental amounts on schedule. Prepare potential re-buy strategies, just don’t execute them without solid favorable trend ID.

     It’s redundant, but monitoring the pattern is the most efficient approach to go/no-go decisions in this environment. Stay tuned.

Market Bullets® Tuesday, May 6, 2025: at Dawn

     Here comes gold (again). The June Gold futures contract, now the “front” month, were up $66 per Troy ounce in early morning trade on Tuesday. The price of gold had been in “correction” mode, pulling back about $300/oz from April 22 to May 1. The powerful series of new all-time highs that began in November 2022 had pushed gold up $1,891 per ounce. The trading environment has been one of agitation, emerging global conflict and rising fear. The amount of capital that has moved into gold is enormous and likely has included large central bank activities with regard to reserves, especially in the light of threats to the Petro-Dollar. As an indicator of anxiety and anticipation of trouble, the recent behavior of gold seems to be a loud and clear statement of lack of confidence in fiat currencies.

USDA’s weekly wheat crop condition report shows the 18-state average condition as 51%

Good-to-Excellent (GEx), an improvement of 2% over last week.

     PNW winter wheat crop conditions show WA at 78% GEx, +3%, OR 66% +8% and ID 65% -7%.

     TX 31% +1%, OK 48% + 4%, NE 33% unch. Montana saw a 9% jump in winter wheat crop health at 79% GEx.

     Taiwan tendered for 99,000 metric tonnes of U.S. milling wheat Monday, for delivery July-Aug.

     The next World Ag Supply/Demand Estimates (WASDE) report will me Monday May 12, 9:00 AM Pacific Daylight Time (UTC-7), 11:00 AM Central. The May report is one of the more potentially volatile events of the reporting cycle, although there is no obvious emerging stress-point on the markets going into the report, which will include the first domestic and global supply and demand balance sheets for the new marketing year. The wild card, if there is one, is still Russian wheat production doubts. So far, there has been no indication or announcements suggesting significant problems with their wheat crop condition.  

     The trading pattern of wheat has not changed. There seems to be just enough buying to prevent a very strong downward movement, but nowhere near enough to create a breakout to the upside, with early northern harvest less than a month away.

The trend, if we must identify one, is flat, as Chicago is trading at about the same price zone as September of 2023. For marketers of wheat, the pattern is going to be valuable as a measuring tool for detection of a change in price behavior at some point, with a break to one side or the other. Incremental sales still make sense, but with a stand-by re-purchase plan to be executed only when there is an actual positive price signal.  This approach is not for everyone, as it involves re-establishing some controlled amount of price risk, but the logic is sound. Call your merchant to review what that strategy might be.

It's trackable. Let’s track it!            

Market Bullets® Thursday, May 1, 2025: Pre-Dawn

     When the futures market moves from one contract to another, it can create some chart anomalies that seem disruptive. The May wheat futures contracts in Chicago are expiring within a couple of weeks and have entered their delivery period, during which holders of short-sold contracts can “assign delivery” to long-bought holders until the contract ends. during this time, all holders of long-bought contracts that have not offset their position by selling it to someone else are assured of receiving 5,000 bushels of #2 or better Soft Red Winter (SRW) wheat per contract in the form of an ownership certificate for wheat located in any of the various designated elevators. They will then be paying storage if they wish to keep it, or they can load it out, incurring a “lift fee” charged by the elevator operator. This is an activity that is usually confined to a few merchandisers that have reason to take ownership of the wheat, along with the occasional hapless individual trader who did not listen his broker. There is no wheat truck that pulls up in front of the trader’s house and asks his wife, “Where do you want this wheat dumped, lady?”

      Meanwhile, the futures trade moves on to the next deferred contract which in today’s case is trading at a higher price due to the cost of carrying the wheat, storage and interest into the next delivery period.

      It makes the continuous front month chart look like there was a rally when there was none. All other things being equal, the corresponding cash prices around the country are the same as they were the day before, as the “basis” is changed to maintain the market quotes. It happens every time there is a futures contract expiration, some spreads having more and some less on the chart pattern. There is no other way to express the ongoing front-month price. In this way, the futures contract prices are welded to reality…real wheat that is.

      One factor that is a relief to technical front-month chart followers this week it that the lead month contract is now quite a few cents above the deadly “support” zone that has been under attack. Without a signal trip wire, the market will relax until it either fails again or creates another pattern that leads to a different trend identification. By this point in time, the vast majority of money fund traders and small specs have moved to the July contract already.  

      The funds did take some profits on Wednesday, which helped take the downward stress off somewhat. Now we will continue the same story that we have been constructing for many weeks and months. July is a real “new crop” contract for many. The crop looks healthier that it has been for weeks, and there are other wheat sellers in the global markets. The bottom line is that there is no bullish story consensus to lean on, so the same marketing refrain applies; make your incremental sales as scheduled. There is no buy signal.  If your personal risk profile allows it, a decent idea is to prepare a re-buy strategy if we discover that there was a black swan swimming around on the pond the whole time and the market turns upward, but buying before there is an uptrend structure identified is risky.    

Stay tuned, it will get more interesting soon…

Market Bullets® Wednesday, April 30, 2025: Pre-Dawn

     A very thoughtful article written by Karen Brown of Reuters was released on April 24th through UkAgroConsult. It is worth the time to read. “Two months ago, USDA forecasts showed that world wheat stocks-to-use (SU) among major exporting countries would reach a 17-year low of 14.56% in 2024-25, but this month’s update shows the figure at 15.89%, the second-highest in six years. That’s largely due to sharp declines in China’s wheat import estimates over the past three months.”

     Per the most recent USDA report, marketing-year-to-date wheat export shipments total 19.46 million metric tonnes (714.9 million bushels), up 15% from the same period in 2023/24. USDA’s current projection is for a 16% year-over-year export increase.

     U.S. Corn producers managed to get the drills into the field enough to make a big advance in planting progress last week, even with widespread rains across the Midwest. USDA reported on Monday that the crop was 24% planted as of April 27th, up from 12% last week and better than the 22% five-year average. “Rain makes grain!” It seems unlikely that Wheat will find much sympathetic support from the sister grain under this setup. December corn futures have declined 26 cents since mid-April highs and are now looking down the barrel of a strong crop.

     The wheat market is sagging, but there is trade talk of bargain hunters watching very closely. The calendar-month-end trade may prod the money funds into some profit-taking action on Wednesday, as there is a tempting little pile of short-sold cash on the table. If they don’t bite that bait, the message is that they believe there is more downside potential. When the trend is down, as the current wheat chart shows, the buy signal if there is one is mostly short-term in nature. Contra-trend profit-taking bounces without solid foundational reasons to rally can be vicious. It is not a good trade for small accounts.

     Prudence says to go ahead and sell planned incremental amounts of cash wheat, but prepare for a re-buy scenario to be applied only when a proper buy signal emerges. The temptation to buy “cheap” wheat because it’s cheap can be very strong, but picking a low is rarely a good strategy. Some might call it, “catching a falling knife.” If it works, you are a genius for a few moments, but new lows are likely to be followed by more new lows, quickly turning you into the opposite of a genius… (speaks from experience).

     Stay tuned, there is a lot more coming.

Market Bullets® Tuesday, April 29, 2025: Pre-Dawn

     The wheat market is showing weakness, but volume of trade has tapered off by half from the surge of interest that showed between March 28 and April 11, during the recent positive 40-cent price runup. Open Interest (the sum of all outstanding contracts held by all traders in Chicago wheat) has also declined by some 32.000 contracts during the negative move from April 11 on. This is a moderate sign of non-confirmation of the downward move, although it does not indicate whether that move is completed yet.

     Early Tuesday morning trade had Chicago at plus 1-2 cents, KC down 1 cent, Minneapolis HRS up 2 and Paris 11% Milling wheat up 1-2 cents per bushel equivalent. The tone of the complex is relaxed and slow.

     The wheat market knows it can buy as much wheat as it needs to without straining at the present price, although the producers across the spectrum are all holding back as much as possible at present, helping to keep a bit of price support present.

     The sharp losses in the wheat markets that put prices at or just below the long-term support zone (where buyers had reliably been found over the last several months) ended Mondays session with a lift from session lows and a close very near the various support lines that we have relied on for such a long time. This is no kind of idea that the downward tendency is over, but it is an acknowledgement by the market that the line does exist.

     FranceAgriMer (similar to USDA) reports quality ratings for the 2024/25 French soft wheat crop were down by 1%, at 74% good-to-excellent condition through April 21. Last year ratings were at 63% at this point. France, the largest producer of wheat among the EU nations, had a very bad wheat production season for wheat last year, and is expected to bounce back toward “normal”.

In the U.S., wide-spread and timely moisture is covering millions of acres of grains, including wheat stands that had been suffering from drought until this week. There are some western states that remain under stress, but the picture no longer has a straight consensus of drought.

     The USDA Crop Condition Report out Monday afternoon shows PNW winter wheat at: WA 75% Good-to-Excellent (GEx) up 6%, OR 58% GEx up 2%, and ID 72% up 2%.

     The overall 18-state average for U.S. winter wheat came at 49% GEx, up 4%. Last year at this point it was also 49%. The anticipation of this improvement was likely the driver of the negative price move on Monday (before the Crop Condition report was released).

     TX jumped up 4% to 31% GEx and Nebraska gained 3% to 33%. Overall a solidly improved U.S. winter wheat crop.

     There is no buy signal, just less expensive wheat. Most of the downside risk of owning wheat has been drained out, leaving a low energy market that must wait for something to happen. There are traders bargain hunting, but that group is rarely large enough to do much heavy lifting. Mostly they are part of the support line.

     Stay tuned, there is room for a bounce, even if it is a simple profit-taking run. The character of the move will allow a peek into the underlying strength of this market. There is still downside potential. (There is always more potential in the direction of a well-established downtrend).

Stay tuned, Stay on plan.  

     It’s a good time to be aware of the daily market. Stay tuned here. We will see it.  

Market Bullets® Monday, April 28, 2025: Pre-Dawn

     Monday morning’s Chicago July wheat futures contract gapped down just ¾-cent on the Sunday evening trade opening and never looked back, heading south on a 45 degree angle, down 9 cents at 2:10 AM Monday morning Pacific Time (UTC-7). Fundamentally speaking, it is not a remarkable action, but technically it’s a little like watching a drunk dancing on the edge of a balcony railing.

     The market seems unable to find a problem with the emerging crop, with decent moisture entering some of the more rain-needy southwestern Hard Red Winter (HRW) wheat states and no sign of Russian wheat crop issues.     

     Reminders from USDA: Total U.S. commitments (the sum of accumulated exports and outstanding sales) are 21.2 million metric tons as of March 27, up 13 percent from the same time last year (using week 43 as the basis for comparison, which compares to March 21, 2024). The forecast U.S. export total for 2024/25 is still a 4-year high and up 16 percent from the 52-year low observed in 2023/24. U.S. wheat production was much larger this year, while key competitors Russia and the European Union had much smaller crops. However, reduced global import demand limited the year-to-year increase in U.S. exports.

     The big trading money Funds have accumulated a large short, but that is only a part of the whole picture. This is a factor that may end up being the key to the spring season market pattern. Please click <HERE> for a more detailed examination of the COT Report.

     This market is weak. It may dip below the long-established baseline on the charts. If it does, there is likely to be a rush of selling, a “capitulation” run that will be a big disappointment to many producers. It would not be the end of the story, but would project a longer time before a price recovery. Stay on plan. Make the incremental sales. There is more to come.

Stay tuned.

Market Bullets® Friday, April 25, 2025: Pre-Dawn

     Charts (and many funds finish) front month rollover from May to July contract tracking on Monday, April 28. Continuous charts will reflect a spread of about 14 cents per bushel higher on that day due to the “carrying charge” (the cost of storage and interest) to July deliveries. This is a normal market structure, but it creates a “Chart artifact” that appears to be a rally in price, but which in fact is not. Please call or text with questions.

     Germany’s farm cooperatives estimated 2025 wheat production at 21.41 MMT, up almost 16% from last season’s heavy-rain-reduced crop, and above their previous estimate of 21.36 MMT.

     Early trade Friday morning showed Chicago May Futures up about 4 cents heading into their last weekend before First Notice Day delivery begins on Monday. The new front month will be July, a true “new-crop” delivery month, as Soft Red Winter (SRW) wheat harvest begins to expand in May. The wheat market has spend a long and dreary spring to date hovering very near a well-established line of low prices that now present us with a “base” on the charts for the next significant move. When that price trend shift begins to emerge, it will be relatively simple to identify, as it will either break downward below the flat pattern it has been trading for many months, or it will begin to rise to challenge the upper side of the range, about $6.33 to $6.56 in the July futures, some 84-108 cents above the current market. (Please note the first paragraph above that attempts to illuminate the carrying charge effect on the charts).

     Prognostication is not a reliable weapon in the marketer’s arsenal, but we will venture to point out that there is actually a trend developing in the Trump administration’s efforts to recalibrate the global trade arena’s yard markers; if the negotiations begin to slow down, like listening to a microwave popcorn bag getting near completion, it seems clear that we will see a more reasonable environment begin to emerge. Many in the global wheat trade have apparently been slowing down transactions due to uncertainty of tariff settlements and other more political considerations. Once early harvest begins to claim the attention of merchandizers, buyers and shippers, it seems likely that we will experience a surge of wheat movement, accompanied by a price increase… That is a forecast, not a certainty, but a somewhat plausible scenario. This is not a good reason to interrupt a marketing plan, but only a reason to observe price movements and the “tone” of the hive closely.

     We will be tracking the trading funds and their still-heavy short-sold positions in the pre-harvest period. As of the last CFTC weekly report, Chicago “Large Speculative” traders have an aggregate -88,326 contracts sold. Historically that is a relatively big net position, one that could provide quite a bit of short-term price lift if something comes along that makes them believe that profits must be taken.

     It is raining in some of the thirsty Hard Red Winter (HRW) wheat plains states, even as the window begins to close on benefits from moisture. That has bothered the wheat traders that had been counting on a crop disaster in Texas, Oklahoma, Colorado and Nebraska. That seems to be fading. But it’s spring. The conditions can still shift very rapidly.  

     This market is capable of big things, with a downside that is limited by the fact that most cash wheat sellers that need to clean out storage ahead of harvest and pay bills have already taken some action to do so, and are unlikely to crowd the window if the market gets negative.

Market Bullets® Thursday, April 24, 2025: Pre-Dawn

     Tariff negotiations with China are dominating the wires and the minds of many market participants. China and the U.S. both have strong-willed chief negotiators (Donald Trump vs Xi Jinping) and both leaders have reasonably strong public support. Of the two, Trump has more and louder critics, giving Xi some confidence that those critics will weaken Trump’s resolve eventually. The talks may take longer than some may hope, but both leaders also have good reasons not to waste time. Business daylight is burning. Everyone needs to get back to a focus on productive activities. There is a whiff of good in the wind, but no solid evidence yet. Perhaps some white smoke will come out of the chimney when they get to an agreement.

     There is still large, upward momentum in the gold futures contract. The hyperbolic trendline prevents simple chart tracking. The downside risks are considerable, with very rapid and unpredictable pullbacks, even though “normal” for a market with an intact uptrend, will be large enough to seriously damage a small account.

     The rain is on the plains. Even though the USDA trimmed 2% from the U.S. 18-state winter wheat crop condition in the last week, a very timely rain could make a very large difference in the middle tier of western Hard Red Winter (HRW) wheat states. The market is focused on this potential, but the Russians seem content with their stressed winter wheat crop as it stands. The hope of a powerful upward force emerging from desperation in the Russian winter wheat region is fading slightly. It is still early, and measuring losses from dry fall-cold and dry winter conditions is nearly impossible to do accurately until the crop is well into spring growth stages.

     Paris 11% milling wheat is weaker than the U.S. exchanges, suggesting a better emergence season this year in France and other EU wheat production countries. Paris also is a reflection of Black Sea wheat potential.

     The price trend in Chicago wheat futures is either absent or a very slight downward tilt. For the moment it will take some news out of China or Russia to trigger the next phase of wheat market movement.  

Stay tuned. When the change comes it may be “interesting”, and potentially volatile.

Market Bullets® Wednesday, April 23, 2025: Pre-Dawn

     CHS will deliver 60,000 metric tonnes of wheat to Jordan in the last half of July, originated in one of several source countries, likely from the U.S., although Jordanian wheat deliveries have been dominated by Black Sea origins in recent years. With recent wheat price declines and a weaker U.S. Dollar, U.S. Hard Red Winter (HRW) has become competitive.

     Significant rains, 4 inches or more are expected from Iowa and Indiana toward Nebraska Illinois and Indiana. Western Kansas and Oklahoma may finally get some moisture, some 1-2 inches in the next few days. This is not a price positive factor, as some of the recent positive days had been resting on declining crop conditions in the western Hard Red Winter (HRW) wheat states.

     Crop conditions in the PNW have been steady-better, with the most recent USDA condition report showing WA at 69% Good-to-excellent (GeX), OR 56% vs 49% last week, and ID at 70% vs 68.

     The national, 18-state winter wheat aggregate condition as of April 20th was reported at 45% GeX, a couple of % lower than April 13th.

     TX and NE as representatives of the wester HRW belt showed 46% and 0 headed, with conditions at TX 27% GeX and NE 30%.

     Paris 11% Milling Wheat futures are hitting new lows dating back to August of ’24, as French wheat crop conditions have improved. The Black Sea wheat market is also indicated by the Paris contract, and Russian wheat crop conditions have given no indications of losses (yet). It will be some weeks before those stats can actually be calculated.

     The wheat market extended charts (see the Monthly and Annual Chicago wheat charts) show a sideways band that is mature, but not historically stretched out too much. The market is too wary to scare buyers into covering, and the sellers are aware that with global wheat supplies in relative tightness do not have a “deep bench”, so any factor that tilts toward reduction in northern hemisphere crop reduction will be friendly to wheat prices. The first upside target, if the trigger event ever arrives would be the highs of June 2023 and May of 2024 around $7.30, about $2.00 above todays moribund trading range. We just say that to be cheerful, not to trigger buying). It will take some serious work to move wheat that far.

Steady as she goes. Stay awake. Stay tuned.

Market Bullets® Monday, April 21, 2025: Close

     The wise guy says, “Too many sellers and not enough buyers”. Chicago wheat trimmed off about a dime on Monday, ending at the low side of the rising, 15-session channel. This is not a strong wheat market, but there is enough worry about the southwest Hard Red Winter (HRW) wheat crop due to dry conditions to keep the price from more serious damage. The U.S. Dollar Index (which is mostly tuned to European currencies) is down to year-ago lows, historically not a major decline (yet), but declining interest rates will continue to be a brake on USD strength.

     Natural Gas futures are down hard on Monday with short-term surplus in the pipeline. Nat Gas is a major component of anhydrous ammonia production, although nitrogen has been going up in recent weeks, it takes quite a few weeks for Nat Gas price moves to impact actual retail prices.

     Stock indices are lower, but still above the midpoint of recent swings. Copper, a big factor in international construction costs, is stable, suggesting that stock markets volatility is over-done.

     The background for wheat prices is nervous but still functioning well. Most politicians realize that it is playing with fire to comment too harshly on stock performance.

     For now, wheat is weak, but still hanging onto recent mediocre gains. One day at a time.

Stay tuned.

Market Bullets® Thursday, April 17, 2025: Pre-Dawn

     Current fundamental wheat market factors have been dissected, reassembled, scoped and reviewed to the point of exhaustion. The weather will happen when it happens, and the market will react appropriately. Tariffs will work as incentives to negotiate or they won’t, and the wheat market will continue to display prices that seek the most efficient way available in our world to move all of the wheat from the hands of producers to the hands of the consumers.

     If there is too much wheat, the price will decline until there is enough demand to absorb the surplus and less wheat is produced. If there is not enough wheat, the price will rise until the supply is rationed and more is produced. The cycle between these poles of production and consumption will never cease.

     Wheat is trading very near or slightly below break-even for many growers. We have seen that growers will continue for a while even if the price is not enough to pay all of the bills, but this does not continue without production eventually declining to the point where wheat becomes scarce enough that it regains value, incentivizing more producers to increase production. The world knows this, and the market itself knows this.

     The market is designed to solve this problem.

     The wild card is politics. The irresistible impulse to interfere with the natural cycle of supply and demand is perilous because it creates harmful imbalances, either gross surpluses that are very expensive, or a decline in production that can destroy capacity to recover, leading to wild price swings that, although they are self-correcting, are as destructive as bad weather to the wheat industry.

     So now we must do two things; First to market our wheat deliberately and intelligently to maximize opportunities. Speculation has its place, but it is not necessary for success. Second, to try to prevent hijacking and weaponization of the markets by powerful political interests. The natural market cycles will not kill our business, but gross intervention in those markets is a known business killer.

     Don’t surrender your powers as a producer; the power of an open market plus your skill at adapting to natural cycles. The current low phase of the price cycle will end, and when it does you will know it. Meanwhile…

     The Chicago wheat futures market as a bellwether has proven for the last 20 months that it is aware that the price is near the point where wheat production will begin to decline below global consumption needs. Now we are just waiting for the next phase to begin. It will be simple to identify, as the last 20 months of market pattern have set clear boundaries. If the market moves into an uptrend, be as patient as possible. If it moves into another leg lower, continuing the downtrend that has been in place for 33 months since the spring of 2022, then be as aggressive as your marketing plan allows. Sell on schedule and prepare ways to make the market work for you if it begins to recover.

     Call your merchant to discuss what makes sense for your operation. Your confidence in the alternatives will rise, increasing the odds in your favor, and decreasing stress. Watch the trend, ride the trend!

Stay tuned and good hunting!

Market Bullets® Wednesday, April 16, 2025: Pre-Dawn

     This week, Jordan completed an open tender for wheat of 120,000 metric tonnes of wheat for delivery in 50-60,000 tonne consignments between July 1-15, July 16-31, August 1-15 and August 16-30, U.S. origin wheat has not been exported to Jordan since 2018.

     The last significant U.S. origin wheat into Egypt (the largest global importer of wheat from all sources) was in 2021, but since then, Black Sea origins have dominated their regional markets completely, based on transportation/location advantages and low cost of production factors.

     SovEcon, a Russia-based market analyst, has maintained its forecast for Russia's 2025 wheat production at 78.7 million metric tons (MMT), down from 82.4 MMT last year. Weather risks remain higher than normal, with drought-stressed crop conditions heading into last fall’s dormancy, but current indications are for generally stable conditions. The Stavropol region, the third largest wheat production area in Russia, accounting for about 10% of last year’s wheat crop, was hit with hail and harsh winter conditions a week ago, which seems more like needed moisture, even if it was in a nasty form.

     The Buenos Aires Grains Exchange (BAGE) estimates Argentina’s next wheat crop at 20.5 million metric tonnes for 2025/26, 1.9 million tonnes (10%) larger than last year’s 18.6.

     Fertilizer prices are generally rising slowly, even as natural gas contracts have fallen about 20% from the first trading day of April. Nat Gas represents more than 60% of the input cost of producing anhydrous ammonia, a significant application of nitrogen to many dryland wheat operations.

     The wheat price is at least stable, with quite a lot of political drama around the arena. The world loves to wrangle politics, but people have to eat! The price trend for wheat is without a mandate, sitting near the long-term lows that have held in place for 20 months. That makes a nice platform from which to launch, but there is no launch date. The Russian wheat crop is not made, which is a well known, much discussed fact, but there is no way to rush the crop. It will come or not, and the weather is going to play a role, but up to now, it has been benign. Hanging onto wheat while hoping for a weather event in Russia to make prices rise is not a good way to market wheat, but holding with a yellow alert status near long-term lows is a decent way to try to be opportunistic. If the lows are broken, then sell some wheat. If the high side of the range is broken out, then sit back and see how far it wants to go. This is a chart game now, as spring “silly season” often is. The trend is sideways, with a very slight bias to the low side. If Russia slips through the spring season with adequate rainfall and mild temperatures, this market will be negative, as it has already built in some weather risk premium. The tariffs seem not likely to be a big factor. So we hide and watch.

Stay on this channel, as there will be alerts along the way at some point(s).

Market Bullets® Tuesday, April 15, 2025: Pre-Dawn

     Northern hemisphere wheat is developing nicely, including Russian/Ukrainian wheat. There are some regional stress points showing, but none large enough to move the market. There are still some weeks ahead that may bring weather events, but this is a good time to be wary of “confirmation bias” in market thinking.

     U.S. wheat shipments marketing-year-to-date stand at 18.295 million metric tonnes (672.2 million bushels), a 14.42% increase from the same time last year. 

     The moisture starved Southern Plains, from the TX panhandle to western KS are seeing rain in their forecast, still not too late to make a significant difference in production, but every day now counts hard.

     The weekly USDA/NASS U.S. Crop Progress report says US spring wheat is 7% planted, at the 5-year average. WA is at 28% planted vs 42% 5-yr Average. ID is 38% done vs 31% avg. winter wheat crop conditions were down 1% to 47% good/excellent for the 18-state total.

     PNW winter wheat shows WA at 69% good-to-excellent (up 4%), OR 49% (down 11% - ?) and ID 68% (down 1%). No market-moving numbers here, but Oregon’s numbers were anomalous.

     TX winter wheat condition apparently dropped from 26% good-to-excellent to 22%. Need rain.  

     Early trade on Tuesday showed not much to expect. Maybe some slow fade in Chicago, giving back most of the gains from last Friday (sponsored by fund short-covering, triggered by Not Much). The short-term wheat charts are not flashing any signals. The long-term (monthly or annual) charts have not given a go signal for many months. We are willing to be patient, especially since we don’t have a choice right now, but the trendline for wheat is flat. When the change comes it will show up here.

Stay tuned.  

Market Bullets® Monday, April 14, 2025: Pre-Dawn

     The development of a grain exchange among the “BRICS” nations (Brazil, Russia, India, China, and South Africa) is continuing, although this is still in very early stages. One feature mentioned in previous announcements of the exchange idea has been a less open system of grain sales and purchases, including “private agreements” and not open tenders, putting more wheat pricing power in the hands of the government of Russia.

     Russia's Deputy Prime Minister Dmitry Nikolayevich Patrushev’s office reported last week that 93% of the country's winter grain crop is in "normal" condition. There are now a few comments and indications that Russia’s wheat crop has not declined to far this spring, following last fall’s drought affected stand. Their winter has not yet finished, as last week early emerging wheat may have experienced some damage from hail and very low temperatures. It is still early enough in the season that measuring the crop condition is a bit sketchy, but by the end of April, the market will be expecting to see more accurate data. Many among the western wheat trade have looked to Russia’s crop condition as a price-positive over the next 30 days. So far, it has not been a market factor. Standby for more on this.

     One reason that the tariff trade conflict with China may not have a dramatic effect on grain market prices is that global capacity of wheat, corn and particularly soybeans is limited. China will absorb a certain amount, which ultimately has the effect of supporting global prices, whether it comes from U.S., Russian or Brazilian origins. Technical analysis of corn and soybean charts is tilting toward upward potential, a healthy if indirect factor behind wheat price potential.

     FranceAgriMer announced that 75% of the country’s soft wheat crop is rated good-to-excellent through April 7th. One factor that has supported global wheat prices is the near disaster in French wheat production last summer. They are on their way to a recovery year, which should show up in Paris Milling Wheat futures contracts.  

     Friday’s rally in wheat did not have headlines to drive it, but the funds were buyers in Chicago, reducing their net short position by about 10,800 contracts, now at 91,924, still historically a relatively heavy net short. There is still dry powder available.

     Take all of the above and add it together: hints of positive tone, but the weekly Chicago charts show only a sideways channel (still below the BoR moving average).

Stay tuned to this channel.

Market Bullets® Friday, April 11, 2025: Pre-Dawn

     Russia’s Institute for Ag Market Studies (IKAR) this week suggested the country's winter crops are in “relatively” good condition and pointed to expectations for a wheat harvest projection for 82.5 million tonnes. Which is a couple of million tonnes stronger than the talk a month ago. In the past the Russians have been better at projecting smaller crops and price-positive factors than expansionary, price-negative crop estimates, so this announcement may be taken more seriously. It is a small adjustment, less than 2%.  

     France’s Strategie Grains analysts raised their All-EU soft Wheat production forecast to 128.1 million metric tonnes, up +600,000 tonnes (about +0.47%) from the previous estimate. Marginal.

      The (over) anticipated impact of Section 301 vessel fees is easing, as U.S. Trade Rep Greer is indicating the fees may not be fully implemented or that they could be “cumulative”. The administrative target is apparently an attempt to re-vitalize a tattered U.S. shipbuilding industry, but mostly seems to be calling attention to a dependency on China for too many things.

     Southern KS, western OK and NE are the driest of the southern plains wheat states, although some marginal moisture has reached the edges of that region in the last month. Texas wheat was reported on Monday at 26% good-to-excellent condition, while OK was listed at 42% and Nebraska at 37%.  Texas harvest usually shows up in Brownsville in the middle-to-third-week of May, about a month away.  

     Marginal changes in ag statistics, like the ones USDA provided in the April WASDE Thursday, are not likely to run the market very far. Wheat stats were mildly negative, with U.S. carryout projected by USDA at 846 Million bushels, above the average of pre-report analysts guesses. World ending stocks were also very slightly increased to 260.70 million metric tonnes, just a tid above the average guess. The market responded with a proportional decline of -4 for Chicago May contracts and -3 for Hard Red Spring (HRS).  KC Hard Red Winter (HRW) and Paris Milling Wheat were weaker, both down 10-11 cents per bushel, likely in part due to the IKAR hints of somewhat improved crop strength in Russia’s vast wheat hectares.

     It will take something more than we what are seeing on the screen today to generate a significant wheat price rally (more than 50 cents+-), with or without tariffs and vessel fees. At the moment there is enough wheat for everyone with no major threat to supply looming, and the trading funds are in a complacent mood. All of this could change quickly, as quiet markets are relatively rare periods of late, so the only solution is to set price alerts on the range boundaries and have a thoughtful conversation with your co-op merchant about tactical plans that can yield cash flow and take advantage of 50-90-cent futures range movements.   

     Every upward move in every market starts with one (1) session up. That makes this business interesting every day! Pay attention to the patterns that show up, usually after a long period of no-trend, otherwise known as a base. We will see it when it comes, but only if we are looking.

Stay tuned!   

Market Bullets® Thursday, April 10, 2025: Pre-Dawn

     At 4:00 AM Thursday, wheat futures were up 2-6 cents across the board, including Paris. The World Ag Supply/Demand Estimates from USDA will hold the market’s attention until after 9:00 AM.  

     Algeria has accepted tendered offers for durum wheat from Canada, Australia and the United States, with shipments March 1-15, March 16-31 and April 1-15. Algeria is expected to import over 9 million tonnes of wheat to meet domestic demand in the marketing year 2025-26. 

     On Tuesday, with regard to “301 Port Fees”, the U.S. Trade Representative Jamieson Greer told the Senate Finance Committee that the administration is “revising the proposal based on public input” to consider vessel capacity and reduce fees for ships transporting agricultural goods. It the container ships that are the money targets. In any case the pressure has dropped considerably with the “pause” of the tariffs except for China. There is no way to calculate realistic capital forecasts until the matter is much more settled, not likely for at least a couple of months. Meanwhile,   

     As of Thursday morning at 3:30 AM, The Chicago wheat futures market has gained an average of about 3¾-cents per session, but the daily highs have been within ¾-cent of each other. This is known as a “grinding” market, the opposite of an “impulsive” one. In order to declare an uptrend, we have to force a 1-2-3 pattern to fit, but it’s a bit like the sisty ugler trying on Cinderella’s glass slipper. The May contract is 3 cents below its 135-day statistical mean, and 14 cents below the now-horizontal BoR moving average line. All of that is merely an indication of a flat market awaiting motivation.

     USDA will provide some diversion on Thursday at 9:00 AM Pacific Time (UTC-7), 11 Central. The analyst’s consensus based on a Reuters pre-report survey is for an 825 million bushel ending stocks figure for the year, about 6 million greater than last month’s USDA figure. World Stocks of wheat are average-guessed to be at 260.39 million metric tonnes, that’s about -0.12% (twelve one-hundredths of 1%), which is less than the error rate of the actual number. Not impressive. But that is the most exciting thing we have to look at except the tariff and port-fee circus.    

     The charts are not showing a tradeable trend, but they will at some point.

     The stock market has about exhausted itself for the week, with wind-sprints the length of the field in both directions, interrupted only by jumping jacks in between. Friday’s closing settlement may not reveal much about direction. The thing to focus on is the quality of the companies themselves, and not the whippy price action. It is being demonstrated as this is written that the administration is aware of and sensitive to the perceptions of the business community. Impulsive trading on fear or anxiety is not a good idea…skepticism good – cynicism bad! Better to be emotionally centered and deliberate.

     We will see the changes as they emerge. When those changes are confirmed, then we will follow planned actions.

Stay tuned.   

Market Bullets® Wednesday, April 9, 2025: PM

The “Maestro” has directed that the nations that have not retaliated be rewarded with a rest! The concert is not over yet.

See S&P Here

Market Bullets® Wednesday, April 9, 2025: Pre-Dawn

     French milling wheat exports from Rouen have been increasing new high volumes for the last couple of months, the beginning of a large recovery from the disastrous recent year. The French wheat crop is a large factor in European markets, competing often with Russian wheat.

     Yurkiye is entering their critical wheat maturation season with short moisture. The region affected is related to the extreme southern Russian wheat production region. Since crop condition is not regularly measured and published in Russia, crop condition reports in adjacent countries can be the only reasonable data available.     

     USDA will release the April World Ag Supply/Demand Estimates on Thursday at 9:00 AM PDT (UTC-70, 11:00 Central. On the heels of the quarterly stocks and planting intentions from March 31, this particular report is unlikely to stir trading energy, but new ending stocks estimates may shade the attitude of the wheat market just enough to push the price below the technical lines that are so well defined just below the current price activity, so Thursday’s session will be dominated by the pre-report guess and check ritual.

     Wheat has been well behaved for the last few sessions, with a display of respect for the technical support price zone that is now about 16 months old. This is a pattern base that is in proportion to the size of the price decline from the war-driven highs of 2022, suggesting a technically positive period if the base holds together.

     The 94-week statistical mean has a slight negative slope. The current price of wheat in Chicago is right on this indicator. There is no mandate showing on the charts for a rally, and little to frighten the bid funds or end-users into a short-covering (buying to close out previously sold contracts) rally.

     It may be dull, but there is large potential in this market, so consistent observation remains more important than usual.

     The pattern change, when it comes, will be quickly identified on the charts before the fundamental picture clarifies.

 Stay tuned.   

Market Bullets® Tuesday, April 8, 2025: Pre-Dawn

     The first USDA Crop Condition Report for the marketing year shows overall wheat crop condition of April 6, 2025 at a rather dismal performance so far:

The National 18-state Good-to-Excellent (Gex) is at 48% versus last year same week at 56%.

     PNW 3-state winter wheat condition for the week of April 6 at about 65% overall,

     2025 – WA 65%, OR 60% and ID 69%.  

2024 – WA 44%, OR 73% and ID 63%

     Texas is the weakest at 26% GEx versus last year at 44% same week.

     The Chicago Soft Red Winter (SRW) market was up 4¾ cents at 4:00 AM Pacific Time (UTC-7). KC Hard Red Winter (HRW) was up 4 and Minneapolis Hard Red Spring (HRS) was up 3-5. Paris Milling Wheat at mid-session was indicating mixed plus or minus the equivalent of 1-cent per bushel.

     Wheat is still trying to stay on a positive slope. The effects of large-scale economic adjustments on wheat may be muted, as it represents a sensitive and important staple for so many billions of humans on the planet. The politicians understand this.

     Even with the above factoid, the market is essentially headline-driven for now, and the funds were net sellers of wheat futures in the last week, pushing their overall position over the 100,000 contract short-sold level last seen in the spring of 2017. Ultimately this is a fuel source for upward price movement if and when something comes along to stampede the herd into buying back those sold contracts. For now they are relatively calm.

     Stay on the beam. Look for changes on the charts. Your carefully thought-out marketing plan is your best tool. Be patient.

Market Bullets® Monday, April 7, 2025: Pre-Dawn

     Some of the key markets; The 2-Year T-Note interest rate, gold, and crude oil, have all worked below Friday’s wide range in opening sessions, printing mostly new lows, but they had moderated slightly upward as Sunday-Monday trade continued. The big stock Indices: S&P and Dow Jones Index futures, have each declined another 5%-6% to touch the 20% pullback level late Sunday, but by 2:45 AM PDT (UTC-7) had recovered slightly and are not disorderly. Monday’s session will be instructive (if not destructive) as the Overhaul continues. For now, “Fasten your seatbelts, it’s going to be a bumpy night.”

     As a young broker during the 1987 “Black Monday”, during which the stock market was down 22.6% in a single day, one thing that stands out in my memory is that those who sold heavily on that day or even during the Friday session preceding that day, is that many of them took very heavy losses and then never recovered, as they did not have the emotional energy to re-acquire their former positions in good companies. It took 9 months, until July of the following year, before the entire episode was erased entirely by a rising market.  The companies whose stock prices have dropped have not dropped because of actual problems at this point…only forecast ones. The old rule is: If you must forecast, forecast often, as things may change.

     So the shadow of the tariffs is still just that, a shadow. Mr. Putin, whose economy was virtually unplugged from the Petro-Dollar, with heavy sanctions on Russia and (almost) anyone who was willing to trade with him, is probably laughing. He has survived. President Trump’s political enemies should not be underestimated and will certainly attempt to use any weakness to panic the troops into a stampede. As the markets retrace, it is best to watch closely, as the market speaks a kind of truth that is not available on TV interview shows.   

     Wheat futures on Sunday evening are unch to  plus 2 cents per bushel across the three major U.S. exchanges. Paris is indicating an unch to slightly positive start for the week.  

     It is just dawning by now that the new tariffs are somewhat negotiable, no matter what President Trump says on “Truth Social”, but the game is “New York Style Hardball”, and it is unlikely that Trump will give away much ground in early talks.  For marketers of wheat, the market is still above that long and well-known sideways bottom zone. Corn and beans are trading quietly down 2-5 cents as of 2:45 AM Pacific Daylight Time (UTC-7).

     The trend for wheat is hard to discern. With the disruption of the financial markets and Political din, we will merely watch the charts for a signal. Alert patience.

Stay tuned.

Market Bullets® Friday, April 4, 2025: Pre-Dawn

     Diesel dropped several percent on Thursday. Most of the market perspective is less about direct effects of tariffs on imported fuel or crude oil and more about eight OPEC+ ministers (Saudi Arabia, Russia, the UAE, Kuwait, Iraq, Algeria, Oman, and Kazakhstan) agreeing to raise crude oil production starting in May with a jump of 411,000 barrels per day, quite a bit more than the trade had expected. The tariff-effect calculation is focused on broad effects on many markets that will need time to recalibrate, setting up a lower demand pattern that has been anticipated for months, with or without tariffs.

     It is probable that Putin, an influential OPEC+ participant, does not have our best interests in mind. It seems intuitive that he may be anticipating an increase in production in the U.S. and wishes shape OPEC+’s actions to decrease the profit calculations for re-opening wells and building pipelines. This strategy has worked before.     

     Meanwhile, ag producers may benefit from lower fuel costs for a time. Diesel and Crude futures dropped about 5%-6% on Thursday. In early trade Friday morning they were holding near the lows of mid-March. If confirmed by additional market action, this kind of swift price movement always takes several days or even weeks to work its way into retail channels.  Forward decisions about commitments on fuel purchasing may be more effective with attention to the trend.

     Global bulk ocean vessel freight rates had been in an upward recovery from 14-month lows, but on Wednesday and Thursday they have paused the rise, apparently in harmony with global anxiety over possibly slower business growth. The competition between wheat exporters is not affected much, as they all have to apply to the same merchant marine bottoms to move wheat, but there are some new rules about “Port Fees” that may cause changes in the wheat exporting arena. Gonna keep an eye on this.  

     As of Wednesday’s close of business, tariffs versus Mexico and Canada were not activated and the previous exemption on all United States-Mexico-Canada Agreement (USMCA) compliant goods remaining in place (a relief to wheat exports). Effective April 9th, Japan will be seeing new tariffs at 24%, South Korea 25% and Philippines at 17%. The markets will be digesting this set of trade hurdles for some time, so responses may be delayed.   

     There are no new chart pattern developments for wheat. Friday very early trade had Chicago, KC Hard Red Winter wheat and Minneapolis Hard Red Spring (HRS) futures all down 3-4 cents, all still perilously close to key long-term established low price bands that, if penetrated will likely trigger more selling pressure with an open field containing few previous measuring points of historical buyer support. The market has been working on this chart pattern base for many months. If the price band holds, it will function as a price benchmark for technical calculations of upward targets.

     For marketers of cash wheat, the support band under this market could function as a selling trigger if broken, as it would very likely take some time for prices to find their way back above the line.

This is trackable. Let’s track it!

Market Bullets® Thursday, April 3, 2025: Pre-Dawn

     The global market complex – the whole thing, has some striking features in the present environment; rising volatility, as tariff and cease-fire negotiations rumble and boom, and the spring grain marketing (the “Silly Season”) kicks off. Interest rates are declining, leading to a weaker U.S. Dollar Index.  That index is heavily weighted toward European currencies, with the Japanese Yen as the lone Pacific representative currency. The Dollar is more stable in Chinese Yuan terms than the EuroDollar. Copper has pulled back from all-time highs, but is still trading within a few percent of those highs, mostly on strong demand. Crude oil is approaching a very long-established horizonal chart line of support, which if it is broken downward, suggests a return to lows not seen since 2020 around the $30-$50 level. The Dow Jones Industrial Index is stable, holding above its -9.8% lows from Mid March, obviously not a market running scared. Probably the most outstanding futures price record at the moment is gold, which has posted a series of new all-time highs (see comment below gold chart).

     Wheat prices have shown an awareness of a price level of support that has been established over many months of trade. In Chicago continuous front-month futures charts, wheat has been flirting with the multiple lows dating back to December of 2023 in a narrow range of $5.14 to $5.26. Early Thursday morning the May futures were around $5.30, still counting a plus 1¾-cent gain week-to-date.

     Markets generally do not react well to uncertainty, but it is remarkable that we have not seen much higher volatility so far. Money usually moves to where it is treated the best, minimizing risk and maximizing return. At this point the overall market message seems to be “continue as before”, but there is no trader awake that does not understand that this could change very quickly, hence the exaggerated response to rumors of rumors.

     This requires that we pay close attention to the tone of the market, a term that may not be easily quantified, but that most experienced traders know intimately.

     The wheat market tone is nervous, but sellers are as reluctant as buyers at present. For now, we will hide and watch. The mandate will emerge at some point.       

     How the markets speak?  In price patterns (intensity and duration). How do we listen? Looking at the patterns and observing the fundamentals that correspond; government actions/statistics, weather, producer reactions, speculative money movement, emotions of the crowd, effective demand, effective supply, operational costs. The number of variables is limited, but each of them requires good consistent data to be reliably assessed. Here we thank the loyal and dedicated folks to whom falls the job of the analyst and statistician, of which we are neither. We are consumers of analysis and statistics, observers and translators. It is still a demanding job.

     Stay tuned, There is little change, in spite of all the rattle-bang news. Hang tough.      

Market Bullets® Wednesday, April 2, 2025: Pre-Dawn

     Oklahoma, Texas, Montana and South Dakota are the most rain-needy Hard Red Winter wheat states. There is moisture in the forecast, but forecast is not cast in mud yet. Monday April 7th we will see the first release of weekly Crop Condition reports from USDA.

     The USDA sez 2025 U.S. corn planted acreage is intended at 95.326 million acres, up from 94.0 million at the Feb Ag Forum and nearly a million above the average estimate. Looks like the soybean/corn price ratio’s indicated favor toward corn was correct, rotation or no rotation. The price of corn has played a role in encouraging wheat to rally. Now the sister grain may be unable to help much more.

     A Reuters survey of analysts and traders has the expected 2025/26 Australian wheat crop at 28.6 million tonnes, 16% below last year’s 34.1 million on dry conditions. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has pegged the crop at 30.5 million metric tonnes. This could if realized make export pricing of U.S. wheat into in the Pacific Rim easier. Only about 15% of total global wheat exports originate in the southern hemisphere.  

     Minneapolis Hard Red Spring wheat futures were down 4-5 cents at 2:30 AM Pacific Time (UTC-7). Paris 11% Milling wheat futures were indicating about the equivalent of 3 cents per bushel.

     China has announced supplementary tariffs of up to 15% on imports from US origins starting March 10, mostly focused on agricultural goods.

     The wheat market is still above the dangerous, sensitive price levels that it visited last week around $5.18, but upside follow-through has been slow in coming. There is a fair chance that we will see more testing of those long-term support price levels before there is a rally of significance. It’s all about the weather now, both in the southern U.S. plains and in the Volga Valley and north. Tariffs will be an ongoing issue, but so far are not playing a major role for wheat prices.

     The short-term trend is unconvincing but positive. The Chicago price of wheat is well below the Box-o-Rox moving average. The choices are either hold and prepare for potential failure of the support price zone, or sell increments on schedule and prepare re-buy orders for the first buy signal above current levels. No-one will be able to criticize either strategy.

Stay tuned.

Market Bullets® Tuesday, April 1, 2025: Pre-Dawn

     USDA’s reports Monday morning delivered a little bias, but no explosive surprises.

      U.S. wheat stocks as of March 1 were posted at 1.236 billion bushels, 15 million bushels above the average trade pre-report guess, but within the range of expectations.  

     The Annual Prospective Plantings report showed 45.35 million acres of wheat intended this year, significantly below the 46.53 million acre pre-report trade average. Total winter wheat acres were 800,000 acres below the January Winter Wheat Seedings 33.315 million and 75,000 below last year. Other Spring wheat was showed with intentions of 10.02 million acres, also below the 10.531 million acre trade estimate.

     This was just enough of a miss on the acreage to release the buyers that had been waiting to pounce, pushing Chicago wheat up 9 cents, KC Hard Red Winter (HRW) up about 4½ and Minneapolis Hard Red Spring (HRS) was the leader, with a 10-cent gain. Paris seems to have taken its lead from Chicago/KC with a 4-cent equivalent gain, and was still slightly positive heading into their late session Tuesday morning (They are 7 hours ahead of Pacific Time – 6 hours ahead of Central).   

     In very early AM trading, the market was hanging onto the gains across the board.

     The setup looks technically positive, but has not been confirmed yet. We’ll just take this one day at a time. At least there was no collapse on Monday!

Stay tuned.

PS - Yet another new all-time high in gold.

Market Bullets® Monday, March 31, 2025: Pre-Dawn

     USDA Planting Intentions and Stocks inventory reports due out at 9:00 AM Pacific Daylight Time (UTC-7), 11:00 Central. Until the data-dump is completed, the market will just wander about without mandate. By 3:30 AM Pacific Time Monday the Chicago May contract had traded back and forth inside of 3 cents on either side of unchanged. KC showed a net minus 5 cents, based on improving weather conditions in the southern plains states. Minneapolis was down 1-2 cents and Paris 11% milling wheat was indicating a price-positive session.

     More commentary pending post-USDA reports on a chance of being helpful with regard to the trend. Stay tuned.

PS - Another new all-time highs in gold, up to $3,159.30 in the June contract. Now up $854 since June 26 of 2024, about +37% since then.

Market Bullets® Friday, March 28, 2025: Closing Perspective

     This week saw: Gold June delivery contracts to new all-time highs at $3,124.40 per Troy ounce on Friday, March 28, 2025. – Copper May delivery contracts to new all-time highs at $3.26 per pound on Wednesday, March 26, 2025 (Global copper supplies tightening on rapid pace of consumption). The Dow Jones futures contract is not “plummeting” and is still trading above the 40,661 lows of March 16 (Currently at 41,583). The world is sitting up nights studying Tariffs and How They Work”. Is it possible to run entirely on tariffs and do away with most of the current tax system? We are heading into some previously explored but not well-mapped economic territory, somewhere beyond “Reciprocal” tariffs. Very educational!

     Chicago wheat broke below previous May contract delivery lows at $5.30 and also the previous March 4th contract low of $5.26 on both Thursday and Friday, but DID NOT close below the March level. This is NOT a confirmed failure – yet. Monday’s USDA Reports may produce enough momentum to either break the lows and target the lowest previous low traded on July 29th at $5.14… or this week’s low may be the base of another attempt to rally into spring weather season.   

     The next few days of trade will be technically fraught, as the market’s chart direction is determined.

     KC on Friday was the weakest of the major futures contracts, with a decline of -37¼ cents on the week, most influenced by mildly improving crop conditions and a poor competitive pricing position in the global arena, in spite of the U.S. Dollar Index declining 3.5% for the Month of March (with one more trading session on Monday).

     There is no confirmation of any Russian stress in early wheat crop conditions, although it is still early to be able to measure such things accurately.

     Chicago wheat was the weakest performer for the month-to-date, with a minus 30 cents as of the close Friday.

     The wheat complex has suffered a beating heading into month-end and quarter-end accounting, setting up potential drama on Monday morning. Even if the report is a dud, and there are no surprises, there may be a “brakes-off” reaction as the complex heads into a traditionally volatile period.

     More post-report on Monday. Stay tuned.

Market Bullets® Friday, March 28, 2025: Pre-Dawn

     Early AM trade for wheat on Friday was negative. Chicago May contracts have fired a warning shot with the penetration of the $5.26 low from January 19th. There are a couple of additional lows between $5.20 and $5.14 from Last July/August. These are the last low boundaries before we reach the price levels of summer of 2020. There are few factors, either emerging or presently dominant that could be counted as price positive.

     On Monday USDA will release wheat seeding estimates, with the average trade pre-report guess of 46.475 million acres. The recent Wheat Outlook Forum forecast was for 47 million acres. The reaction of the market after the report will hinge in part on how well the trade anticipated the new number.

     The trade is looking for 33.97 million acres of winter wheat and about 10.53 million acres of spring wheat, a 53-year low. These guesses are what the industry has been trading. A significant variation on report day is a potential source of price volatility, which is why the trade is hesitant before the report.

     A slight increase to all-wheat inventory stocks is expected, with pre-report guesses averaging 1.215 billion bushels, versus 1.089 billion bushels at the same time last year and 1.570 billion bushels in the previous quarterly report.

      Tariff and vessel tax debates are heating up. The impacts of such efforts, especially vessel taxes, have significant potential to drag on already slowing U.S. ag exports, although at present its still just talk.  

     Quarter-end and month-end position adjustments are underway, giving the market volume that is not necessarily related to trends, but book squaring and profit-taking instead. Most of the positions involved may be replaced quickly from Next tuesday onward, so are not likely to change many trend lines.

      Is there a way to parse all of this marginal statistical tinkering and get perspective on what the market is likely to do? Put up the weekly chart, walk back a few paces from the screen and look at the pattern as if you had never seen it before. Ask. “what is this telling me?”. All of the information above and quite bit more is already built in to the price structure through thousands of real-time, real-money decisions right up to the moment. There is no better indicator than the actual prices being printed.

     We think the market is weak…Duh! We are trading so near to long-term lows that there is a constant threat of a downside breakout. The country is not willingly selling cash wheat into commercial channels at this price, and international buyers are confused by tariff talk. The cessation of war (at least for a time), is a price-negative factor. It is too early for the spring drought in Russia to be a market force. Every day that passes brings the northern hemisphere to a crop, eroding the chances of a price rally greater than a return to recent swing highs. With Friday morning’s break below the support lines, we will have to watch the market every day to confirm or deny a resumption of the long-term downward lines.

     Go ahead and make previously planned wheat sales. There are ways to re-buy if you want to speculate on the upside to come later. Wait until there is a buy signal to do this.

     It is amazing how much discipline selling at a long-term price low requires, but it is that same discipline that will increase profits in an uptrending market.

Stay tuned.

Market Bullets® Thursday, March 27, 2025: Pre-Dawn

     There is a new agreement that included Ukraine and Russia at the table, pausing attacks on shipping and against energy targets (Ukraine had been hitting the refineries and fuel storage depots pretty hard). Russia is insisting that the agreement includes lifting sanctions on food, fertilizer, and shipping along with “several other conditions”. Apparently, the Whitehouse has agreed to promote these ideas. Black Sea grain shipments may not be radically affected, since they were already proceeding, but shipping insurance costs may decline. The overall implication seems to be that the deal is not completed, but may proceed inchoate until Putin decides to change it.

     The Russian-Ukrainian “agreement” (with small ‘a’) is a signal to the wheat trade that more wheat is likely to flow into the global channels, even though there is not likely significant capacity to expand Ukraine’s wheat shipping volume, and Russia already has the quota brakes on. Early AM trade on Thursday had Chicago wheat down a couple of cents. Price movement momentum is still muted, as there are important statistical reports coming Monday, leaving most traders pondering an extra day of housekeeping before Report Day.  

     The market is quiet. Volume is low. Volatility is also allowing option prices to fade a bit.

     Even if the Monday data-dump brings no fireworks, the wheat markets of late have a tendency to hold their collective breath until the report is out, and then to proceed vigorous pursuit of the pre-report agenda as if a brake release had been pulled. Either way; thunder and lightning or calm breeze, we will move on quickly after the quarterlies are released.

     The Chicago wheat May futures contracts on very early trade Thursday are trading just 6 cents above their FW March lows of $5.30. A failure of that level on a closing basis would likely trigger some technical selling that has been holding on for quite a long time, independently of the upcoming USDA data.

     The funds, already net short-sold, have historically shown capacity to add to their positions from their present total. A positive surprise from the Monday reports (smaller corn acreage than expected, for example) could also spark a buying frenzy. This is why the market always waits for reports to be released before committing significant money.

     The trade is nervous, but not impulsive. The price of wheat is near enough to historically significant lows that those prices become mesmerizing, almost magnetic. Most producers are not willing to sell in such proximity to the lows. The market knows this, which has contributed support for many weeks, but there are changes in the wind. It is better to sell at a new low if one must, if only because new lows are very often followed by more new lows. It is very rare that a single new low is printed and becomes the bottom.

     Stay tuned here for more. It sounds dismal because it is dismal, but that is not a reason to suspend a marketing plan.

Market Bullets® Wednesday, March 26, 2025: Pre-Dawn

     For wheat marketers, most of the time corn is a far peripheral, a sister grain that does not compete directly for the same customers, but occasionally has a market effect. The competition between corn and soybeans for planted acres is occasionally fierce, and when this conflict heats up it can affect wheat. USDA’s Planting Intention Report and Quarterly Grain Stocks Inventory, are both due out Monday, March 31 at 9:00 AM Pacific Daylight Time (UTC-7), 11:00 Central.  

     Analysts are posting pre-report estimates of 2025 U.S. corn plantings at 94.3 million acres, 3.7 million above last year, and above USDA’s more recent 94.0 million. The corn/soybean price ratio is running at about 2.23 corn to 1 bean, a price ratio that favors corn acres for a producer that has a choice this spring. 2.5 corn to 1 bean is near the breakeven for this ratio, which has been moving steadily downward for the last 18 months.

     There is often enough force behind the release of the march USDA stats that the market reacts vigorously. Wheat has little to offer on its own, but corn may provide some motivational energy, thus the trade is in a holding pattern until the statistics are out.

     Hard Red Winter (HRW) wheat crop conditions in the southern plains states have leveled off, or at least are not in free-fall. The (very) slight improvements to HRW in the U.S. are similar to those coming from Russia. Both are (very) early, but both are reminders not to depend too heavily on springtime crop losses as a reason to hold wheat that should be priced.

      Wednesday morning early trade is showing no momentum.  The market is waiting.             

Meanwhile, From Gabriel’s desk:

     Picture the wheat market, a bustling marketplace in an ancient city, Brawny-armed Vendors in aprons and sharp-eyed buyers sniff and peer at samples and haggle over prices. The stalls are lined with sacks of wheat—some freshly harvested, others imported from far-off lands. Every interaction is influenced by the rhythm of the city and the whispers of the world beyond its borders.

      In this marketplace, the traders are eyeing the recent moves—prices are tentatively climbing after weeks of decline. December delivery SRW wheat forward contracts sit like a cautious merchant pricing goods at $5.72 3/4, while HRW wheat futures demand a premium at $6.86. Much discussed “Resistance” price levels hang overhead, where it has been clear in the past that there are willing sellers of large amounts. The merchant is wary of increasing prices too much for fear of losing customers. The farmer whose ability to pay his land rent depends on the price he receives for his wheat worries about too many neighbors showing up and flooding the market. The Relative Strength Index suggests that buyers and sellers have reached an uneasy truce, neither pushing too hard nor pulling back entirely.

The fundamental forces shaping this marketplace are the whispers heard in the crowded stalls. "Drought in Argentina," one vendor murmurs. "Dry skies in Western Australia," another adds. Excess rain in Brazil casts shadows, like rumors of spoiled goods spreading fear among buyers. In the U.S., farmers in hard red winter wheat regions are like merchants whose stalls are thinly stocked—they desperately hope for rain to replenish their wares.

      Outside the marketplace, the city’s rulers are making decisions that send ripples through the stalls. Trade policies and tariffs are gatekeepers at the city gates, determining who can bring goods in and out. Inflation and rising interest rates are tax collectors, tightening their grip on merchants’ profits. Geopolitical tensions—raiders threatening the outskirts of the city—add an edge of uncertainty that keeps everyone on their toes.

     This ancient stonewalled, marketplace with dusty streets and creaking wagons is a microcosm of the global wheat market, where supply and demand meet the forces of politics, weather, and human ambition. The vendors—farmers and traders alike—must adapt to the ever-changing dynamics of their world, as they’ve done for centuries. It’s a tale of resilience, ingenuity, and the enduring value of wheat as a cornerstone of civilization. In the end, no-one has the power to control the reality that people have to eat, that the great enemy is still hunger, and that the tenacious and steady wheat farmer is the one without whom we cannot survive.

Market Bullets® Monday, March 24, 2025: Pre-Dawn

     Russia’s Institute for Agricultural Market Studies (IKAR) released a fresh 2025 wheat production estimate, raising their forecast estimate from 81.0 to 82.5 million metric tonnes, in a range from 78.5 million to 86.5 million. A 1.5 million tonne increase is slightly less than a 2% change. The significance of this report is not its magnitude but that it is the first increase reported in many weeks and may represent the first whiff of an indication that there may be an only moderately reduced crop versus a seriously drought-squeezed one. It is still a long way to a “made” crop, as the trade knows very well that spring moisture is a difficult variable, and the Russian crop went into dormancy last fall in weak condition.

     The southwestern Hard Red Winter (HRW) wheat states are still pleading for moisture, as they have been teased by the storms further east that have been putting abundant rain on the southeast Soft Red Winter (SRW) states and the eastern HRW belt.  

     The private analyst SovEcon released ideas that Russian wheat exports were 1.6 million metric tonnes, below 1.9 million last month and 4.8 million last year, same month. No surprise here, but the figures are consistent with the relatively buoyant wheat market behavior of the last several weeks.

     Arlan Suderman at Stonex, 3-24-25: “The markets will see the peace talks as bearish for wheat prices. A return to peace in the region probably doesn’t change the flow of wheat much, as the war didn’t really slow the flow that much. But it would be expected to reduce shipping costs, while allowing Russia’s ruble to strengthen somewhat.”

     The wheat complex is well aware of the fundamental fact of historically tight global wheat and corn stocks that have had the effect of de-emphasizing aggressive selling below the 92-week mean price line (using Chicago wheat as the representative contract), but this kind of well-worn information is only a descriptor; a broad-brush shading of conditions in the background for a long time…in “futures market time” – a flexible concept. 

     Technical commentary on the wires has shifted slightly toward a “hold” for wheat contracts, but with the clear mandate to exit if the lower boundary of the 7-month price range ($5.14 in Chicago May futures) is broken. There are a few intermediate price levels that may serve as warning lines if the market closes below them, the most prominent being the $5.25 - $5.30 zone, about 18-23 cents below very early AM trade on Tuesday. A price chart base that has reached the age of 7 months without a large break has some gravitas, and should be observed carefully.

     The wheat price trend is in doubt, and a test of the patience of wheat marketers is underway. There is still a very slight upward bias, but it is so thin that a small deviation from expectations for the upcoming quarterly Stocks Report along with planting intentions could shred the carefully drawn chart lines, not to mention random tariff considerations. It always is prudent to have some orders to sell incremental amounts of wheat already considered and noted with price and delivery times pre-calculated (it just keeps the psych pressure lower if the market gets crazy).

     The market is trackable, but short-term, daily or shorter charts can generate anxiety that does not serve our purposes.  For a break, take a look at the longer-term, weekly or monthly charts. Stay tuned. 

Market Bullets® Monday, March 24, 2025: Pre-Dawn

     It may become very “Teejus” as we wait for “tariff policy developments”, not to mention USDA’s Prospective Plantings and Stocks Reports (Monday, March 31, 9:00 Pacific Daylight Time – UTC-7), 11:00 AM Central.

     It is likely to be difficult to tease out any expectations of positive price effects, as trade tariff wars have historically never been quick or easy, and both sides suffer. The magic can still happen if the negotiators understand that this is essentially a game of “chicken” that can only end well if both sides give a bit. It is true that the U.S. seems to have been overly generous for many decades of trade negotiations. Maybe this time it will be different.  

     Even with the rising temperature in global trading agreements, China has been a decent buyer of U.S. soybeans. They were in last week totaling 269,900 MT, including 266,100 MT switched from “unknown destinations.” They know we know that they know we know that there are soybeans for sale in Brazil…

     The last weeks U.S. wheat sales of 248,800 metric tonnes (9.14 million bushels) was a marketing-year low and well below the previous week’s 700,000 tonnes. Vietnam and Indonesia were leading buyers but Panama cancelled 272,900 tonnes, presumably due to … trying to make a statement about who is in charge … trade negotiations.

     The large trading funds, a perennial force in wheat trade, have been adding to their significant net short-sold positions, ultimately setting up a reserve of must-be-buyers later. For now, the effect is negative.  

     Russia’s wheat exports are well behind last year’s pace, off almost 7%. Their total marketing-year-to-date is 34.5 million tonnes versus 41 million the previous year.

     Word on the street is that Russian farmers  possessing the capability to choose are shifting away from wheat towards other crops, such as canola or sunseeds, as profitability of the grains approaches break-even or lower.

     The charts are not showing a strong price pattern. Buyers are beginning to behave cautiously and there is still old-crop wheat for sale. This is the time to be watching the charts and talking to your merchandizer about marketing plans.

     Stay tuned to this channel. The changes may come quickly, as we are dependent on weather and trade negotiators (headline generators).   

Market Bullets® Friday, March 21, 2025: Pre-Dawn

     The wheat market has not changed tone or rhythm for many weeks. The market is murmuring that there is little or no need to change prices to ration supplies. The only advantage to such a slow market is that it builds a reliable set of alarm tripwire prices that serve as warnings of significant movement.  

     Wheat price volatility is low, but it is intuitively strong to expect an increase in April.  For anyone using the market to manage risk, bear in mind that high volatility = more expensive options.

     Net weekly U.S. wheat sales for 2024/25 delivery were expected to range from 300,000 to 700,000 MT (11 million to 25.7 million bushels), compared to 783,416 MT the previous week. The previous week’s sales soared 83% above the average for the previous four weeks.

     Analysts are posting pre-report estimates of 2025 U.S. corn plantings at 94.3 million acres, 3.7 million above last year, and above USDA’s more recent 94.0 million. The corn/soybean ratio is running at about 2.23 corn to 1 bean, a price ratio that favors corn acres for a producer that has a choice this spring. 2.5 corn to 1 bean is near the breakeven for this ratio, which has been moving steadily downward for the last 18 months.

     The monthly International Grains Council (IGC) estimates global wheat production for 2024/25 up 2 million tonnes to 799 million (a .002% change). Ending stocks were pegged up 1 million metric tonnes to 265 (.003%). Extremely marginal changes.

     This week’s Federal Open Market Committee (FOMC) meeting made some changes to the Fed’s economic outlook, with inflation projected for this year at 2.7%, up from 2.5% posted in December, more marginal tinkering.

     The end of march is the end of the first quarter, with planting intentions and Stocks-In-All Positions reports. Without new stimuli to push money in or out, the wheat (and other) markets will be less likely to take aggressive positions ahead of the reports. Big trading funds get paid when they close out trades on a monthly and especially a quarterly schedule, so the approach of quarter and month ends may show some volume on that basis alone in the next 7 trading sessions.

     It is rarely prudent to simply hold wheat uncovered in storage, but these next few weeks may be the only time that can make some cents.

Stay tuned. Hang loose. Avoid abuse.

Market Bullets® Thursday, March 20, 2025: Pre-Dawn 

  As of very early trade on Thursday morning, Chicago wheat futures contracts were up just 3-5 cents week-to-date. KC Hard Red Winter (HRW) had been leading based on dry conditions in the southern and southwestern plains states, but with winter storms nibbling at the edges of those regions with snow, the market has been less inclined to worry.

     Russian wheat weather is also mixed. The ability to measure weather damage to their wheat crop is still not defined enough to frighten the wheat markets.

     There are few factors with the power to lift the wheat market much more in the short run. The trendline for wheat is still defined as positive, but there are limits on how far down the price(s) could move without triggering a rush of selling. The downside remains muted because of the uncertainty of crop conditions in key production areas.

     Paris milling wheat futures were vigorously higher on Wednesday, closing up €5.00 (about 15 cents in USD per bushel). The influence of that contract on global wheat price discovery has increased dramatically in the last 3-5 years, as the influence of Russian, Ukrainian and European Union wheat export sales has increased. Chicago is still globally dominant, but Paris “Euronext” contracts have become a “must-watch” item for wheat price trend-followers.

     Gold has been striking brand-new all-time highs every day for several days. Thursday pre-dawn trade saw its peak at $3,065 per Troy ounce and then pulled back to Wednesday’s low around $3,035. The lead gold futures contract has climbed 18% since Christmas (about $469 per ounce). This is at least partly due to inflation (devaluation of the U.S. Dollar), but is also a sign of anxiety among some large entities, central banks, etc.

     For marketers of wheat, there are no solid fundamental reasons to hold large amounts of wheat in storage except the fact that any sale for future delivery should capture a healthy amount of carrying charge, since deferred prices – including new crop – are higher than nearby prices. The spread charts are consistently showing expansion of the cost storage-plus-interest going forward, a sign of a market that is not in need of nearby wheat deliveries. Call your merchant and get an update on the deferred pricing tools, costs, etc. 2025 is shaping up to be a year requiring thoughtful and deliberate marketing decision making.    

In the March 13th release of USDA’s Wheat Market Outlook Some powerful things to think about for wheat producers in the U.S.

      USDA, Economic Research Service, March 13, 2025: “Global wheat exports in 2024/25 (July–June trade year basis) are forecast at 207.3 million metric tons (MMT), down 16.8 MMT from the previous year and the lowest level in 3 years. Global trade tends to rise over time with growing consumption in parts of the world that are not self-sufficient in domestic wheat production. In the last two decades, Southeast Asia, Sub-Saharan Africa, North Africa, and the Middle East collectively accounted for about 70 percent of the growth in global wheat imports.” 

     “Total U.S. commitments (the sum of accumulated exports and outstanding sales) are 20.3 million metric tons (MMT) as of February 27, up 12 percent from the same time 4 Wheat Outlook: March 2025, WHS-25c, March 13, 2025 USDA, Economic Research Service last year. The largest year-to-year percentage increases in sales are for HRW (up 51 percent) and White (up 45 percent)”

     U.S. domestic Crop Regular Weekly Condition Reports from USDA will resume on Monday, April 7, 2025.

     Anyone watching the news about phone calls between Putin and Trump, followed immediately by airstrikes on Ukrainian infrastructure has to be skeptical about whether the Russians will negotiate “in good faith” toward realistic agreements with Ukraine. For the wheat markets this ongoing process offers little disturbance, unless there is a sudden dramatic development.  

Stay tuned, even if it is quiet.

Market Bullets® Tuesday, March 18, 2025: Pre-Dawn

     Wheat futures contracts across the board have been positive for the last 10 sessions, but overall volume has been declining, suggesting a weakening momentum, as Large Speculative entities have been reducing their net short position (again), although not at a rapid pace. All of this speaks of a market that is cautious and conservative, a healthy tone for continued firmness of prices, if not a powerful rally.

     The 61.8% price retracement line created by the recent February 18th - March 4th  down move is at about $5.86 in the Chicago May contract, just 14 cents above the last trade as we sit here thrashing the keyboard early Tuesday morning. That technical upside target is reasonable, but it does represent a test of the upward force. It is not reasonable to expect more above that level unless there are developments that provide more buying energy.  The most likely source of such a provision would be weather, but a breakthrough with the Chinese negotiators with regard to grain purchases would give a little lift, yah?  

     Very early AM trade in Chicago May futures show a plus-3-cent status around $5.72. KC is up 4½, Minneapolis Hard Red Spring (HRS) is also up about 4 cents. KC is the leader by about 7 cents more than the other markets so far this week, mostly due to drought in the southern HRW zone. Last Saturday’s massive and tragic 71-vehicle traffic crash in Kansas was set up by a dust-storm, grimly confirming the dry conditions in a wide area.

     The overall tone of the wheat market is positive, but this is not an impulsive market. It has a grinding and deliberate price pattern that has reached several technical levels and managed to overcome them. There are always more targets, no matter how far a market moves, so we are taking this one step at a time. Consolidation and correction is a regular feature of this environment. Weather and political influence on the market are both fickle and occasionally violent.

     The Russian Ruble is at its strongest global currency value since June of 2025, just after the Russian Central Bank (CBRF) switched to the Chinese Yuan as the benchmark currency due to the effects of U.S. sanctions on Ruble/Dollar trading. The central factor in the Ruble gain (See <Ruble-Yuan> chart) is speculative interest in the Ruble on expectations for easing geopolitical tensions.

     Stay on plan, make the incremental sales with a planned price objective. Be patient with this market as long as it is above the BoR green line (see Weekly Chicago chart below). If it drops below that line again, release a bit of wheat.     

Stay tuned. The “interesting” trading season has arrived. 

PS – As of March 17, 2025, no Genetically Modified (GMO) wheat varieties are commercially grown in the U.S. The new variety known as “Clearfield” is NOT a GMO variety, as it was developed through traditional plant breeding techniques at the Texas Agricultural Experiment Station and Texas A&M University. 

PPS - Gold is trading at new all-time highs the early hours of Tuesday, March 18, 2026. This market is not easily tracked, and usually sensitive and inclined to rally on market stress. There is a warning light flashing, but the interpretation is elusive. There are large entities involved…central banks? This is not being driven by retail jewelry makers.

MarketBullets® Monday, March 17, 2025: Pre-Dawn

     By Monday, March 17th at 3:00 AM Pacific Daylight Time, Chicago wheat futures had gained back all of last Friday’s small 5½-cent loss and added another 6 cents for a net plus-11½ cents over Friday’s close and the best price level since February 28th. KC Hard Red Winter (HRW) has led the wheat complex upward for the last few weeks on the extended dry conditions on the southern plains. While the European milling wheat contracts traded in Paris have been waiting for Russian weather and crop condition reports, they have traded in a muted imitation of KC.  

     Chicago is challenging some key technical price levels as this is written on Monday morning. The next few days will produce chart test results of a new upward bias.

     PNW soft white wheat wheat Portland/Coast bids have improved 15 cents for March-to-date, versus Chicago up only 1¼-cent since the end of February.  White wheat’s steady demand from the Pacific Rim has been enough to bring Portland bids to their year-to-date best.

     With this short-term show of price enthusiasm, this wheat market is saying it does not yet have full faith in the emerging winter wheat crop’s strength. We have also lost the support of the corn price that had been lending a bit of strength until February 24th.

     The Russian Ruble has gained considerable strength against both the USD and the Chinese Yuan in the last 9 weeks (in harmony with the shift in the tone coming from the Whitehouse about the end of war in Ukraine). The currency improvement in the Ruble is likely to have positive effects on Russian farming economic results, making parts and operating materials easier to procure, although the sanctions placed by the U.S. and others are still in effect. In the longer-term, both Russian and Ukrainian wheat production is likely to increase for the foreseeable future with the cessation of war, but at the present, Russian exports are the slowest they have been in several years, suggesting that they are concerned with crop conditions coming out of winter.

     Wheat is in an uptrend, with little or no new fundamental information flowing. The spring “Silly Season” is upon us! The weather this time of year is capable of overpowering governments as market influence. Chicago wheat is still the bellwether of the world in wheat pricing, and that market is trading this morning above the “Box-o-Rox” indicator, giving a “hold new sales” signal. It is not a trading system, only an indicator, but an opportunistic marketer can use this as a backstop, holding until the price closes back below the line (green on our daily Chicago charts). It’s simple, but it helps.    

      Uptrends are made of upward price movements! Even when there are no direct news headlines pushing the idea of higher prices, the market is made of many thousands of decisions every day by the trade, from the smallest speculative account to billion-dollar funds, which produces an amazing composite of real-time, real-world actions taken with money and not talk, maybe the most honest ongoing stream of market information in the world. Tracking this living, breathing entity which has its own emotions and sensitivities is a marvelous task that is never the same for long. It is not random. It is alive and trackable. Let’s track it!

MarketBullets® Friday, March 14, 2025: Pre-Dawn

     USDA’s report on wheat export sales for the week ending on March 6 showed a very decent number at 783,416 million metric tonnes, pushing the marketing-year-to-date total to 21.274 million tonnes, 15% better than last year at this point. This provides some relief, as the lead on last year had been shrinking.

     Panama, South Korea and “unknown” were featured buyers on the week.

     Canadian 2025 wheat intended acres were estimated at 27.5 million, a half-million      increase over last year. Spring wheat came as 19.4 million acres, a 450,000 acre increase over last year.  

     Ukraine’s spring planting has begun.

     Russia’s Institute for Ag Market Studies (IKAR) has again reduced estimated marketing year wheat exports by 1.5 million tonnes to 41 MMT.

     The U.S. Southern plains are mostly being left out of the moisture forecast.  The market is watching very closely, as this is one of the only potentially price-positive market influencing factors outside of Russian wheat areas, a large portion of which entered the seasonal dormancy period last fall in a weak condition. The next few weeks will be key to  their crop expectations and to the global wheat price environment for months to come.

     Wheat futures contracts trading in the wee hours of Friday, March 14th are slipping into negative territory, although the entire range of trade as of 3:00 AM Pacific Time was well within Thursday’s range, leaving us with little indication of trend. The world has been captured by the Tariff Parade for the moment. The market will likely soon grow impatient with the pattern of bluff and call, bluster and ballyhoo and begin to make its own pattern once again. For the moment the tariffs and weather are the only really meaningful information flows.

     The trend for wheat, if we can see one at all, is still slightly upward. In the light of a stock market that is undergoing a normal “correction” phase, it is somewhat remarkable that the price of wheat has held up as well as it has.

     Gold is painting new all-time highs, while the Crude oil and Diesel markets are flabby and look weak.

     Stay in touch. This phase is temporary, we just don’t know what that means yet…

MarketBullets® Thursday, March 13, 2025: Pre-Dawn

     Gold is still in an uptrend, sneaking back up toward another new all-time high, trading at about $2,954 versus the old high at $2,973, not a big challenge. Gold has always been a risk-sensitive commodity, but there has been heavy buying from large entities in the last 57 trading sessions since mid-December. The trend is upward.

     We are proud of wheat prices for holding on so well in a world that is nervous and conflicted, although the bakers will go on baking, tariff or no tariff. Factors with the power to move prices in either direction have become diluted or exhausted since November. Looking at the long-term wheat charts, it is getting so that we have to squint and tilt our heads to detect a trend. We are going to continue to monitor the boundaries of the sideways range, using Chicago wheat as a bellwether. From current trading around $5.55, that examination yields a lower edge around $5.26 and an upper edge about $6.17, so there is time to research and investigate.

     We observe the large trading funds as a categorical group (required to report their aggregate positions to the Commodity Futures Trading Commission CFTC each week). They are holding a net short position around 84,842 contracts as of the last report (see Weekly Chicago wheat chart below). This is an historically significant position that represents potential buying as they reach time and prices that trigger buying back (short-covering) those contracts, as they must eventually. It always takes a “triggering” move beginning with another factor, (Russian weather?...a Chinese agreement to buy?...etc). It’s a little like powder in the storeroom…nice to know its there.

     This is the time for which thoughtful and deliberate marketing plans pay for themselves. It is legitimate to hold wheat in storage when the market is flat, but storage and interest charges do not stop accumulating every month, so cash wheat held is not a “free” strategy. There are ways to move forward and reduce risk. Call your merchant.

Watch this channel for developments. It’s trackable. Let’s track it!

Market Bullets® Wednesday, March 12, 2025: Pre-Dawn

  Additional notes and quotes directly from the USDA WASDE Report on Tuesday:

     NOTE: The WASDE report only considers trade policies that are in effect at the time of publication. Further, unless a formal end date is specified, the report also assumes that these policies remain in place. U.S. Tariffs on Canada and Mexico have been suspended until April 2 for all products covered under USMCA, which include most agricultural products in the WASDE. Reciprocal tariffs are also scheduled to begin on April 2. However, until these are in effect, WASDE does not incorporate them into commodity forecasts. Despite U.S. tariffs being suspended, Canada’s retaliatory tariffs remain in place. These are accounted for in WASDE estimates and are assumed to continue. U.S. tariffs on China and China’s retaliatory tariffs on the U.S. are assumed to remain in place.

     WHEAT: The outlook for 2024/25 U.S. wheat this month is for larger supplies, unchanged domestic use, lower exports, and higher ending stocks.

     The global wheat outlook this month for 2024/25 is for larger supplies, higher consumption, reduced trade, and increased ending stocks.

      The report did not provide any stats that supported a continued rally. Opportunistic approaches with a view of the sideways range of wheat trade on longer-term charts may be the only game in town until the spring weather becomes dominant.

Stay tuned.

Market Bullets® Tues, March 11, 2025: Post-USDA Report Close

World Ag Supply/Demand Estimates (WASDE)

     The only surprise for for U.S. and global wheat was for a U.S. wheat ending stocks increase to 819 million bushels from 794 million last month (+3.1%). The pre-report average guess was 797 million, no shock, but not a positive influence. The global ending stocks estimate was also increased by around 92.6 million bushels, really just a tid at plus .009% (might as well say unchanged).

     U.S. corn ending stocks official estimate was 1.540 billion bushels, unch’d. Pre-report trade survey estimates had an average guess of 1.516 billion. Again no shock but mildly price negative.

     WASDE Soybean numbers put U.S. ending stocks unch’d at 380 million bushels. The average pre-report guess was for 379 million bushels, a very mildly price negative statistic.

     The bottom line for the March WASDE led to a market that reacted gently, but across the board downward, but as this data is fed to the AI monster models over the next few sessions, we may see some additional selling emerging from the big speculative group of traders, since there is no mandate for buying on the table in the short run.

     State wheat crop condition reports in the southern plains have declined a few percent with Texas now at 28% good to excellent, although it is still a long way to the bin. Oklahoma actually improved a tad, now 46% good-to-excellent from 35%, but the overall outlook has faded a few percent. This may be the only positive factor in the basket for the moment.

Virtually all of the wheat market calendar spreads (Including Paris 11% milling wheat) display movement toward a greater carrying charge configuration, with deferred prices higher than nearby, a characteristic of a market with plenty of available wheat and/or tepid demand in short-term contracts.

     The first trades of the Wednesday session that begins on Tuesday evening were positive a few cents. Chicago +4, KC +5, MPLS +2. This is not unusual or even very meaningful, but at least is shows that the report was of small effect. Wednesday may end up being a slow session. The infant uptrend is still alive, but has yet to prove itself. The tripwire warning lines are still $5.26 (34 cents below current) followed by $5.14 (46 cents below current) in the leading Chicago futures contracts.

Stay tuned for more (we will attempt to avoid speculation about tariff negotiations and DOGE activities, as the mainstream media seem to have that gig locked up).

Market Bullets® Tuesday, March 11, 2025: Pre-Dawn

World Ag Supply/Demand Estimates (WASDE) due out 9:00 AM Pacific Daylight Time (UTC -8). Market comment will be available after there report.

Early trade on Tuesday morning had wheat down about -3 cents in Chicago Soft Red Winter (SRW), -5 Minneapolis Hard Red Spring (HRS) and -3 in KC Hard Red Winter (HRW). The USDA reports are not expected to yield any big surprises, but the if the pre-report survey estimates are off by any significant amount, there is always reason to be respectful of the reaction. Once the report is issued and digested, we will see if there is enough buying interest in wheat to continue to gain.

Stay tuned.

Market Bullets® Friday, March 7, 2025: Pre-Dawn                   

CORRECTION: World Ag Supply/Demand Estimates (WASDE) coming on TUESDAY, March 11th, 9:00 AM Pacific, 11:00 AM Central. Planting Intentions and Quarterly Stocks-In-All-Positions inventory reports will be out on March 31.

     Pre-report trade estimates for wheat expect a small increase in ending stocks for the 2024-25 marketing year ending May 31. The average guess of 797 million bushels is about 3 million bushels 1/3 of 1% higher than February’s estimate, not a market-moving idea. The range of pre-report estimates is 779 to 835 million.

     Corn and soybean pre-report ending stock guesses are both slightly lower, corn at an average of 1.516 billion bushels and beans an average of 379 million.                                                           

     AgriMer reports as of March 3rd the French soft wheat crop is rated at 74% good-to-excellent condition versus last year, same week at 68%. It was later in the season during harvest that the wet, cold weather conditions damaged and reduced the crop dramatically, to the lowest total in 40 years, some 27% below their 5-year average. It is likely that their production will rebound this year, a European wheat price negative.  

     Tariff work continues, with an emerging pattern of tightening followed by negotiations and easing. This pattern seems likely to dominate the news cycle for many months to come. The markets are becoming accustomed to the pattern. Changes to the global trade flow will take time, if the efforts of the Trump administration are to bear any fruit. Grains and other foods seem to be able so far to remain less affected. Nothing is certain.

     Very early Monday trade has both corn and soybeans slightly lower. Wheat is holding steady with a 6-cent advance at 2:30 AM Pacific Time. The very short-term trend for wheat in Chicago is positive, but “V” price bottoms are rare (see Daily wheat chart), so it would be normal for wheat to consolidate and retrace to test the recent swing lows. Unless there is a surprise in the WASDE on Tuesday, or another factor rises from obscurity very quickly, the pattern of range-bound trade will provide some marginal opportunities for marketing incremental sales. The market is well aware that it is the spring moisture pattern in Russia and the U.S. western plains wheat belt that will be the most potentially price moving factor.

     Watch the chart lows for a warning if they fail.

Stay tuned.

Stay tuned. We will see it in the charts.            

Market Bullets® Friday, March 7, 2025: Pre-Dawn                     

     The markets were already a bit uncertain, and then along comes a Tariff Parade, so the trade is standing and watching the clowns on stilts and the jugglers while listening to the brass band play “76 Trombones. We have already seen some of the finest political theatrics in recent memory. The wheat market is willing to pause for a look at what seems to be a potential for at least stable trade, but we have to take this day by day. There is no use in getting all steamed up about specific issues, so we are just going to watch the chart patterns develop and try to be matter-of-fact pragmatic about the marketing plan.

     We still have the base of the big picture just below the current range of wheat price trade as a backstop. If that line is broken, we will make at least a decent token sale of wheat with the intention of a re-buy at some point (but only if there is a buy signal of some kind – there is little sense in buying back immediately without regard to favorable trend support).

     PNW Soft White Winter (SWW) quotes have been resilient, even positive in the face of a despondent Chicago market. An old bit of market wisdom says, “the slowest declining grain market in an overall negative environment is likely to be the strongest once a rally appears.”

     Call your merchant and discuss the practical aspects of the pricing tools. There may be some advance prep to be done.

     Meanwhile, the outside markets are sometimes good indicators of what is really going on behind the curtain. The U.S. Dollar is declining rapidly, although not into any historically new territory, just a quick move down. This makes our wheat more competitive. Some say the New Orleans Hard Red Wheat market is getting more attractive in the global markets.

     Copper is rising to its highest since last May. The red metal contract is a good proxy for global market health, as it is always at its strongest demand when there is lots of construction and manufacturing going on. Data Centers being built are big copper consumers, with thousands of miles of wire rolling out.

      Home Depot stock is trading below its recent all time highs and has assembled a large “head and shoulders” top chart formation. If HD drops below $378 per share, there is a technical measurement that projects a decline to about 48 dollars lower. These old-school patterns are surprisingly effective, so this pattern is worth following.

     Natural Gas is rising, which puts some upward pressure on anhydrous ammonia, as Nat Gas represents 60% to 70% of input costs on production of that nitrogen fertilizer source…Another pattern worth following.

     We also see some of these outside markets as indicators of global market health and early warning signs of any serious problems.

     The wheat price trend is short-term negative, with a small sign of life being displayed. Keep reading the trends, if there are any, of the global tariff reset. The large trading fund money is watching closely. Surprises may be violent. This period will probably make the history books.

     At least it is not dull!

Market Bullets® Thursday, March 6, 2025: Pre-Dawn    

     Some of the buffalo are standing and looking across the river. Some are crossing, but the herd leaders (probably the older females) have not committed themselves. As the tribe watches them from the high ground, it seems that the herd wants to cross. What do you do if you are the leader of the hungry hunters? If you thought, “Hold still and watch. If the herd moves across, we can get ahead of them on the far side of the valley. If they begin to move away, we can catch them between us and the river.” you are in about the right place and the plan is good. “Hide and Watch”.

     The Tuesday gains held overnight. Wednesday netted some slight gains above that level. It smells like this is opportunistic bargain hunting in the wheat market. The first retracement target of the recent violent move downward is at about $5.65 in Chicago May futures. The second target above that is about $5.87.

     Due to the power of the downward move, it is unlikely that it will be simply erased, as there is no consolidation or other base yet established from which to measure. “V” bottoms are somewhat rare. The upward move that is about to be gauged is only a temporary, contra-trend idea at this point. The real untapped energy here is to the downside if the long-term lows are cracked, about $5.14, some 35 cents below current trading. Meanwhile, its day-by-day.  

     Longer-term, there is no large fundamental shift on the horizon that has the potential to draw wheat prices up above $6.17 or higher, unless there is a real, undeniable spring drought in both Russia and the western wheat belt in the U.S.

     Political posturing or tariffs are not the kind of variable that has great positive wheat price potential.  A hot war obliviates all market bets, positive or negative, and is not computable in advance. If there is to be a legitimate rally of more than 50 cents, it has to come from Mother Nature. So we have to learn to live with opportunistic marketing in a less-than-a-dollar range. It can be interesting, but stressful. A good, thoughtful, pragmatic marketing plan with a scheduled scale and defined criteria for selling is our best defense. Its best to do the thinking and writing of such a plan when there is little or no pressure (before it becomes emotional). Of course, you already knew this; just a lil’ reminder.

     Syria has issued its first tender for milling wheat since Assad departed. At least the government offices are open. It will be interesting to see from what source they buy. Russian offers are not grossly discounted in the current market, so the game is on.

      The tariff parade is marching on, with a gratifying number of national leaders paying close attention to what Trump is saying. Its more like a reset than a war.

     The short-term trend is negative, but a bounce is underway which should be used to measure the strength of the market. The long-term pattern is really flat (see weekly charts below). No reason to get excited, just watch the lower boundary and be patient on the upside.

Stay tuned. The herd is unlikely to stay here on the riverbank for very long.

MarketBullets® Wednesday, March 5 2025: Pre-Dawn                     

     Australia’s wheat crop estimates were increased by 60,000 metric tonnes, now 31.9 million tonnes. This is not a market-changing increase, but likely will cap further decrease expectations as harvest winds down in Australia.

     China is preparing to set tariffs on imports of U.S. wheat, among other reciprocal tariffs, as the battle to reduce international trade begins in earnest. The impact on U.S. wheat prices is unlikely to be noticeable, as we were not selling much wheat to China, anyway.

     The impact is psychological at this point, and fascinating to boot, as analyzing the Trump administration’s negotiations and the international responses generated is becoming a national pastime.

     Part of the force behind the liquidation of wheat positions is the loss of the massive support from corn price strength. Wheat had borrowed quite a bit of positive trading energy from corn over the last month, and corn is quite a bit more sensitive to tariff effects, especially with China.

     Wednesday early AM trade had both wheat and corn up 5-7 cents, while beans were also up about 8 cents. This little bounce will likely get sold hard by traders looking for an exit opening. If the gains hold into Wednesday’s close, it will begin to shape a little better tone, but the trend is negative until and unless the buffalo actually cross the river.

      PNW white wheat bids have declined by about 25 cents per bushel since the Feb 19-20 highs in Chicago wheat. Cash movement has slowed.

     The charts are the only rational tool in this kind of “news-wire driven” markets.  The attempt to make logical and practical judgements about wheat pricing in this environment is frustrating and uncertain at best, expensive at worst.

‘Tis all trackable. We shall track it!     

MarketBullets® Tuesday, March 4, 2025: Pre-Dawn                   

     Today is the 10th wheat trading session since the high of $6.21 on February 18th.  The front futures month has dropped 79 cents in that time, the longest unbroken string of downward price movement since the first half of June, 2024, only that -$1.14 ended at the level where this one began, around $6.07.

     With decelerated exports out of Russia, a weaker U.S. Dollar making U.S. origin wheat a little less expensive, and the net price decline for U.S. origins, the downward pressure is less than it was a week ago, but there is no sign of any kind of buy signal that could spook the trade into buying. The market is very close to long-term lows (less than 30 cents on the weekly Chicago chart). This proximity to such key levels is usually a kind of psycho-magnetic zone for most markets, a little like when you stand on the top of the grain tank and it feels like your heels are on the edge of the long drop down. The decisions of traders in this kind of setup is affected, as would-be sellers realize that the tested bottom is near, and buyers are watching and holding. The failure of those long-established price levels could trigger a strong selling rush. The fundamentals of supply and demand are not the primary motivator here; it is mostly Fear of Missing Out (FOMO).

     This market is seeking a reason to buy an “oversold” market. It is a day-by-day process.

     For most marketers, it is a holding time, but the trend is against any buy or hold. That is why incremental sales are so effective. Selling a low is irritating, even painful, but when that low is transformed into a relatively high price in the rear-view mirror as a downtrend rolls on, the wisdom of small, serial sales becomes clear. Call your merchant and review ways to set a floor on price, or a plan for a re-buy when the buy signal is finally detected (It will come eventually).

     We will see the change on the charts first.

Stay tuned, there is another chapter.   

MarketBullets® Monday, March 3, 2025: Pre-Dawn                   

     Wheat Futures in Chicago steady to up 2 cents very early Monday morning. KC Hard Red Winter (HRW) up 2½ and Minneapolis Hard Red Spring (HRS) up 1 cent.

     The last couple of sessions for wheat were excessive in volume and negativity. Chicago  thumped to a close right at the 78.6% retracement line. There were no motivating headlines or new weather reports, only there was enough momentum to push the funds and some cash sellers into liquidation.

     This market has taken a lot of downside risk out of the wheat contract prices, and has returned to the same values that were trading in late January. There are still technical prices below the current trade that have been supportive (revealed willing buyers) in the past couple of months, but the market seems exhausted.

     Paris wheat quotes are showing the equivalent of negative 3-5 cents per bushel Monday morning. Our chart will be updated “end-of-day”.

     Suddenly, with government employees scrambling for balance with once solid employment ground shuddering under their feet, the tariff talk has been tossed into the back seat. And then we have the Zelenskiy/Trump political theatre show. The plain old wheat market is struggling to retain trade attention.

     The week ahead seems likely to be turbulent, which is rarely a price-positive environment, but the market has already reduced exposure. The trendline is still steady to slightly positive on the weekly and monthly charts, but the short-term is not giving a buy signal.

Stay tuned.

MarketBullets® Friday, Feb 28, 2025: Pre-Dawn                   

     Thursday looked like a capitulation by Large Speculative long-bought traders, with a minus 17 cents for Chicago May futures contracts, pushing the closing net to -41cents heading into Friday. The volume of trade on the day spiked dramatically higher than any of the previous six trading sessions, all but one of which were net negative days, while open interest (active futures contracts not yet offset) continued to decline. In other words, the price appeared to be weighed down by heavy selling from trading funds dumping losing positions, a perspective reinforced by declining open contracts through closing out positions, profitable for those who had been net short-sold.

     The rationale behind the price move that is the most popular on the wires is that both buyers and sellers are holding back on business due to unknown market effects caused by tariff negotiations, as liable to spike prices upward as downward, day-by-day. This is plausible reasoning, but when it comes down to making a real$ decision, it is the cumulative negative price movement that puts the pressure on funds to exit longs rather than rumors or tariff-talk. It is also month-end position adjustment time. The fund managers only get a bonus when actual profits are booked, and not from “unrealized” gains. Some of those trades will likely be replaced later, or longs were switched directly to shorts, i.e. liquidation of one contract, and then reversing the position by immediately selling another.  

     The weather talk is of improving conditions for wheat emerging from dormancy, but it is still very early for that to be enough of a motive factor to really move prices more than a few cents, although when the price is already “correcting” a vigorous upward move that ended 78 sessions ago, that talk only gives momentum to the downside.

     Producers that had been sitting on the bench with some wheat that needed to be sold were also squeezed a bit, and did not want to surrender the last 5-10 cents that were gained a couple of weeks ago.

     Overall, Friday may be a much more relaxed trading session, unless the Tariff Parade reveals negative new coffee talk. The upcoming USDA Ag Outlook Forum Conference will be held on February 27-28 and may bring more statistical market fodder. Fundamentally there is very little change. Very early trade Friday morning showed Chicago May futures up about 4 cents, as the March contract will now be entering delivery and expiration.

     The current price level has not broken down through all of the previously described support levels, but Chicago May contracts are below the Box-o-Rox 60-day moving average, lighting the “release delayed sales” button.  This test of the marketer’s patience is almost done.

From U.S. Wheat Associates:

Global wheat production in 2024/25 projected at 793.7 MMT, up 500,000 from previous report last month.

Global wheat consumption to total 803.7 MMT, up 1.8 MMT from last month

Global wheat ending stocks are expected to be 257.5 MMT, down 1.3 MMT from last month

     Interest rates are lower  - see 2-Year treasury chart <here>.

     Don’t get wrapped up in short-term charts, as weekly or even monthly charts portray a more moderate market pattern at this point. It really is a test of patience.

Stay tuned. Ain’t this fun?

MarketBullets® Thursday, Feb 27, 2025: Pre-Dawn                   

     In very early trade Thursday morning, Chicago wheat is at the latest low of a 7-session, 45-degree downward shot, the largest down-move since mid-November last. There is a dent in the technical armor of the uptrend, although the downward retracement is still in the “normal” category, between 50% and 61% of the previous upward move. The lead contract is now 47 cents below the high of February 18.

     We have sold a good deal of wheat to Mexico this year. The potential for damage to the buying pattern involving our good customer may be increasing with soon-to-be negotiated tariffs, so the market may be on hold for a while.

     Production potential for U.S. corn also appears to be climbing as spring planting season nears. USDA’s annual Outlook Forum later this week is expected to include a higher corn acreage estimate.

     The wheat chart pattern is large enough to absorb the recent negatives, but we will need something to offset the tariff fears and general feeling of disarray in the air. This year seems likely to be filled with unknowns and surprises, not always a good thing for any market. The Chicago market as bellwether is closing in on some essential technical price levels that must either repel the barbarians or surrender and bend the knee. We are watching the next supports at $5.69 (which is also the Box-o-Rox level), followed by $5.46 and $5.37. The vigor with which the market attacks each or any of those price points will tell us how much strength remains in the continued move.

     If the price manages to turn back upward, we will then watch to see how energetically it challenges its own old highs.   

      “All we have to decide is what to do with the time that is left to us.” - Gandalf

It’s not much, but its honest. Keep on tracking.

MarketBullets® Wednesday, Feb 26, 2025: Pre-Dawn                   

     The U.S. Dollar has been trending lower, as interest rates trend lower. The interest rate trend is still young, but has chart potential to move lower. We see news articles that say, “The Dollar Plunged…”. It has not “plunged”, but it is down from its January highs and has not shown that it is ready to slow that move yet. The overall market for U.S. Dollars remains popular with global investors seeking a positive “Real” interest rate (“risk free” Treasury T-bills are normally used as the benchmark), minus inflation, minus taxes when applicable). Even when that U.S. Dollar real rate is negative net of inflation, it is considered better and safer than many other global currencies.  

     A lower dollar buys less, but it makes exports from the U.S.A. more competitive in the world. A shrinking dollar value is the only real basis for domestic inflation (too many cheap dollars in circulation make them less valuable). Rising wages or price increases for other reasons are not “inflation”, as it is a dollar supply/demand balance problem. Please do not allow politicians or others to abuse the term! Solving the problem of inflation requires a proper definition of the term!

     The young positive trend in wheat has eroded over the last few sessions, but on Tuesday Chicago May wheat futures came right down to the 50% retracement line and then bounced up nicely into the close, a suggestion that there are buyers lurking nearby. Wednesday very early trade was narrow-range, low volume of trade.

     The volume of trade over the last 6 sessions has been subdued, as were the last two downward periods since the last week of January. A drop in volume in a repeated pattern is a portrayal of less vigor among the sellers. Maybe it is confirmation bias, but this smells like a setup, or a market that is not as weak as it may appear. This observation is not a trading mandate, but it is encouraging if you are waiting for another upward move to complete an incremental sale.   

     This wheat market is still in contra-trend, retracement mode. It will take more than a couple of state crop condition reports from Texas (a 4% improvement) to Oklahoma (a 6% decline) to push this market one way or the other. The trend is still mildly positive.

     SovEcon (a private grain analyst in Russia) says Russian wheat exports for the 2024/25 marketing year are estimated to total 42.2 million metric tonnes. Their new crop year estimate is for 38.9 million tonnes, displaying the idea of a reduced Russian wheat crop,. Not from winterkill, but from last fall’s drought entering dormancy. Spring moisture will tell us whether is reduction is to expand or contract.

     USDA’s Ag Outlook Forum Conference will be held on February 27-28, 2025 at the Crystal City Gateway Marriott in Arlington, Virginia, and may provide some perspective on some key wheat statistics.

Stay tuned. There is more to come.    

MarketBullets® Tuesday, Feb 25, 2025: Pre-Dawn                   

By 5 AM Pacific Time Tuesday morning, Chicago lead futures were fading, with a loss of 9 cents, reaching below recent technical levels that had once been supportive. The accumulated decline is now about 37 cents below the highs printed on February 18, one week ago.

     PNW white wheat bids have been eroding slowly, about 15 cents lower than a week ago at the close on Monday.

     Accumulated U.S. wheat exports for marketing year 2024/25 remain ahead of last year’s pace by 22% versus the previous year, although this lead has eroded during the winter period by 8-10 percentage points.  

     Crop weather will soon grow into a dominant factor as northern hemisphere wheat emerges from dormancy. The 8-14 day projection, March 3-9 shows precipitation probabilities for most of the Plains and Midwest as above normal during that period. Temperatures are expected soon to be above 50 degrees Fahrenheit for large wheat production areas of the Midwest and southwestern wheat states.

     Most markets do not respond well to anxiety. With the increasingly chaotic environment in U.S. bureaucratic affairs, a large, highly integrated part of the global system, long taken for granted by virtually all markets as a benchmark for decision-making, is quaking under heavy blows from the Trump administration. It is becoming clear that it may be some time before the U.S. governmental systems that have dominated the world since the end of World War II will re-stabilize or be superseded by new structures. So far, this emerging factor does not have much direct impact on wheat trade, but there are many complexities of administration that may either disappear entirely or be replaced by new complexities. As Calvin Toye used to say, “It seems like they want to throw the rascals out and replace them with new rascals.” For most of us, it remains to be careful observers of new trends and trend factors, requiring thoughtful and deliberate decisions, especially with avoidance or at least the recognition of emotional states.

     In spite of the rapid decline over the last week’s trading, wheat remains in a positively biased pattern, the failure of which would be noted on the charts before it shows up in the news. There will be little fundamental data to support higher prices until and unless the crop weather in Russia and the U.S. southwestern wheat states produces stress on emerging wheat crops.

It's trackable. Let’s track it!

MarketBullets® Monday, Feb 24, 2025: Pre-Dawn

     Speculative traders are selling more than they are buying in the recent market, but on balance the attitude remains positive looking ahead. This is a demonstration of a market that is dithering, seeking a mandate. Marketers whose intent is tracking the trend are still observing a positive slope, but it is clear that there is vulnerability in this price level. A normal retracement of the recent, 29-session, plus 57-cent move up from early January gives us a range of $5.89 down to $5.69 in Chicago May contracts. The early AM trading on Monday is 5-6 cents above the high end of that range, and anything below it would portray a weak market. As contra-trend moves are kinda nasty and difficult to capture without undue risk, us trend-followers have to be patient. There is still a mild trade consensus that there is more upside potential.

     The emergence from dormancy is still very young, although the robins are in town here in Southeastern Washington, and the creeks are running high with snowmelt in the usual February pattern. This just tells us that it will be a couple of weeks more until the kick-off of the spring “Silly Season” for northern hemisphere markets.

     Corn has provided quite a bit of background support to wheat buyers, as it has attacked the $5.00 level starting from a dollar lower back in October. This in spite of plenty of corn coming from Brazil and Argentina. If corn prices begin to show any inclination to climb sustainably above $5.00, Wheat will get some price lift also, just on sympathy.  Early AM trade in the May corn contract is right at $5.00, up about 9 cents from Friday’s close. Every day that corn is at or above that psych level of $5.00, the more it will be considered a valid positive influence.

     The wheat trendline remains positive unless it breaks downward through the low end of the retracement targets, some 25 cents below current trade. Meanwhile we are above our simple Box-o-Rox 60-day moving average, which allows holding back on incremental sales. It’s a calm period with a friendly bias, a somewhat rare condition! Let’s not get complacent, though. There is room on both sides of center-court.

     The Ruble is trading at it’s strongest since last Aug/Sep, suggesting an end to the costly invasion of Ukraine. This accounts for part of the rapid decline of Russian exports along with quotas and export taxes. The longer-term reality for global wheat prices is that unless there is a considerable Russian winterkill and spring drought combo revealed in the next couple of months, the process of planting and harvesting a large number of wheat hectares that had been removed from production status for the last couple of years will begin in earnest.

     It's quiet, maybe too quiet. No sleeping at the switch!

MarketBullets® Friday, Feb 21, 2025: Pre-Dawn

Chicago wheat is hanging onto 4-cent weekly gains as of 3:30 AM Pacific Time. The tone of this market is not negative, it is in a small corrective move. Unless there is a dire announcement about negotiations in Ukraine, or a similar note of dire change in the global markets, the uptrend remains intact. There is no blazed trail in this environment, so marketers have to re-assess daily if they have a planned, pending, purposeful sale already on the table, but for most of us, it is “hide and watch” (as cousin Terry often said).

The best thing about being aware of the trend is that it will allow a break now and then, where we have to watch carefully, but the rule is “wait”. That is where we are now.

There is expectation that there will be a meeting on U.S. ground between Chinese President Xi and President Trump, suggesting trade agreements similar to the ones inked the last time Trump was in the Whitehouse in which ag buying by China was expanded. This kind of information tends to keep the market calm and at least quasi-positive.

That leaves weather as a driver. It is still a bit early to kick off the “Silly Season” in the northern hemisphere; that annual event where weather forecasts become the daily driver as winter crops emerge from dormancy and begin to be measurable, and planting conditions for corn and soybeans are vital. The temperature forecast for most of the western half of the U.S. in the 6-10-day is “above normal.

March first is the first day of meteorological spring. The spring equinox is not until March 20th. Those markers will come quickly, so the futures market being focused on, well, the future, will begin to expand expectations about production, especially in Russia. The Russians know this, of course, so they will work hard at spinning a favorable (to them) picture. This may give the market some fuel later, but not today.

The trend is still upward. There is a bit of downside potential (see yesterday’s technical price range breakdown).

Opportunistic attitudes are reasonable in this environment, but keep the slices small (its more interesting that way, if a bit time-consuming). For traders, it’s a bit late to initiate new long-side positions. Contra-trend trades are notoriously difficult to capture. 

Stay tuned here for monitoring comments.     

MarketBullets® Thursday, Feb 20, 2025: Pre-Dawn

Corn has been a pillar under wheat’s recent rise for many weeks. It is perched just over $5.00, a key technical target and psychological price.

Wheat is seeking a mandate, having achieved some longstanding technical targets just short of the October highs, about 10-12 cents above current trading levels early Thursday morning. If there is to be another leg higher, it may require more than winterkill and tariff talk.  

The trends for these two grains are both still positive, but the world is standing quietly watching President Trump in the cage with Zelenskyy and Putin, as the tempo and tone of the entire world shifts. The effects may raise anxiety in the markets. In general, markets do not like anxiety. Increasing price volatility seems likely. Both corn and wheat are vulnerable to “corrective” moves against the trend, which are often rapid and difficult to capture for traders.  

Jordan passed on all offers in a wheat tender held this week, a common action that suggests they believe prices may go lower in the next week. It is expected that they will schedule another tender next week.

Even with all of the ruckus in the political-economics arena, the markets have held together. The U.S. Dollar Index has been down about 1% from the close of January’s trade, but the Russian Ruble is quite a bit stronger, gaining about 10% versus the Dollar, and 12% versus the Chinese Yuan. Russian wheat exports have slowed dramatically, which has helped push global wheat prices higher.

If Chicago wheat May futures (March contracts are about to go into delivery and expiration) pull back, it is to be expected that they will test the $5.70-$5.90 zone between 38.2% and 61.8% retracement, about 17-37 cents below current trading, which will not break the longer-term upward trend definition. This would be a test of marketer’s patience and resolve. The Box-o-Rox, 60-day line is about $5.67, near the lower boundary of the retracement price zone. As for the upside, the next target is the old October highs at about $6.26 in the May futures, about 19-20 cents above early Thursday trading. The trend is still upward, but it is time to be paying attention. It will be tough to criticize opportunistic incremental sales in this environment.  

It’s trackable. Let’s track it!

MarketBullets® Wednesday, Feb 19, 2025: Pre-Dawn

     Saudia Arabia, once a very large customer of U.S.-origin wheat, purchased 920,000 metric tonnes of wheat in a regular open international tender this week. The pre-tender expectations were for about 595,000 tonnes. The Delivery period for the buy is May-July, sourced mostly from Romania, Bulgaria and Russia, but Australia also was active in this transaction.

     Trade sources say that Russia’s exporters are expecting to ship less than the 10.6 MMT wheat export quota through June.

     U.S. wheat year-to-date shipments stand at 14.849 million metric tonnes (545.6 million bushels), about 22.4% better than the same week last year. This lead over last year has steadily declined over the last couple of months from more than 30% in December.

     The Chicago wheat market in very early trade Wednesday morning was steady, about 4 cents below Tuesday PM trading levels. The wires are quiet, with less rumble since most of the Trump Tariff parade is on standby, with deferred activation while some negotiation is allowed to work. The process of peace talks in Ukraine is just getting started. Even as Putin meets with Trump, power infrastructure in the port city of Odesa has been damaged, increasing winter hardship there.

     The wheat market trendline remains positive, but may be at a pause, with a retracement of some of the recent gains likely, especially in the absence of demand news. Winter weather is in the talk, but is not enough by itself to lift the market very far beyond the current set of technical targets, many of which have been achieved already.

     Reasons for a large wheat market decline are also not well defined. The likelihood of a period of consolidation and sideways trade is increasing.

This is a trackable market. Let’s track it!

PS: Natural Gas, representing about 60%-70% of the cost of production of anhydrous ammonia, has approximately doubled since its lows of last August. It is still very far below its highs of August of 2022, when Russia first entered Ukraine. The market has adapted somewhat to that circumstance.

PPS: The Russian Ruble has strengthened very rapidly versus both the U.S. Dollar and over the Chinese Yuan over the last 6 weeks, setting even more drag on Russian wheat exports e.g, this week’s Saudi purchase from multiple sources. The Russians may be displaying increasing concern about their wheat crop condition.

PPPS: Gold appears to be making a run at a possible new high, trading only about $7.00 per Troy Ounce below the all-time futures high on February 11th. I have been seeing memes about Mr. Musk demanding a walk-through of Fort Knox. Maybe they are doing some re-stocking…

-G 

We are back! - MarketBullets® Tuesday, Feb 18, 2025: Pre-Dawn

     Chicago wheat front month futures (March is about to roll into May) are trading off about 4 cents in the very early hours of Tuesday, Feb 18, coming out of the three-day weekend. The price in Chicago has achieved a 61.2% retracement of the move that began at the highs last October 2024 and ended at the lows of the first week of January 2025. This kind of retracement is a signature of a strong market, but it is also a potential pause point. We are looking at a price that is 48 cents over our “Box-o-Rox or BoR” 60-day indicator and a “hold” on additional incremental sales of wheat. Acknowledging that this is a crude, old-school indicator and not a trading signal, it is the best that spread has been since last October, when it was about 53 cents. There is momentum in the wheat market, but quite a bit of that is borrowed from the strength of corn, which is also at a testing point. This is not a sell signal, but may generate a test of our patience and faith in the new wheat price uptrend. The pattern is still upward. Attempts to forecast the move are barely worth the air required to speak them. If sales are made now on the theory that the market is about to “correct”, a serious part of that speculative plan should be how to re-enter the market if it decides to continue northward.

     Chicago has gained about 34 cents since breaking above the BoR moving average, while PNW soft white is up about 30 cents in that time.   

     The strongest underlying factor for the anticipation of positive prices in any forward-looking wheat price move is a dry spring in Russia and to a lesser extend in the Southwestern wheat belt in the U.S.

     “Winterkill” is a notoriously unreliable reason for price movement, as it is nearly impossible to measure properly, and historical records show that the spring emergence weather has far more impact on the new crop.

     The funds are still net short-sold in Chicago and KC wheat, but have “covered” (bought back) about 38% of their largest recent net short position in Chicago Soft Red Winter (SRW) and about they are nearly 58% covered in KC Hard Red Winter (HRW). This has reduced the “stored rocket fuel” in these markets that we have been counting on for upward price energy. The fund aggregate is still a mild price positive that will be applied if the market continues to break through the technical barriers remaining above current prices, but there is an increasing likelihood that we will see a setback at some point, allowing the funds to recharge their buying guns and keep the market healthy, but that is mere talk at this point. This is a net-deferred price positive.

     Wheat was the grain market leader on Friday, pushing up

     French wheat crop in 73% good-excellent condition as of Feb 10, a rating not far above the rating a year ago. The crop is likely to be much better in 2025 than the disastrous 2024 harvest amid heavy moisture and extreme weather.

     Russia is playing the market cautiously, lowering export taxes, even in a quota-limited export program and a stronger Ruble. The Ruble is at its strongest relative value to the U.S. Dollar since mid-August 2024.

     The wheat price trend is upward, something that demands patience to hang onto. It will not be in a straight line to the sky. The spring volatility “silly season” is just ahead. We always fall back on the weekly charts to defuse the electricity that comes out of watching the short-term charts. The board shows “hold”, and the next setback will help us measure the strength of the larger move. It can be tough to watch 15 cents of short-term gains evaporate, but that is what is required to capture larger moves.      

     President Trump’s “reciprocal tariff” plan is clearly intended to call other nations to the negotiating table rather than to punish. This blunts “market disruptive” complaints and sets up better future trading conditions for U.S. exports, although there are probably some domestic price bumps to navigate for a public that is accustomed to cheap Chinese products. For wheat this program is less relevant for the moment, but overall market conditions as background to ag export markets cannot be ignored.  

     Long-term interest rates are in a sideways channel, but the large speculative funds are accumulating large net long-bought positions in an apparent setup to take advantage of falling interest rates, although the market is not reflecting this as a trend, it is notable. Higher rates make our business more expensive to run.

PS:  It is an uncomfortable reality that a failure of the peace-talks between Russia and Ukraine would likely be price-positive for wheat. In the long run, all of those wheat hectares in Ukraine will be actively farmed and aggressively marketed once the war is over. Meanwhile, it is spiritually harmonious to cheer for peace in Ukraine, but if it is at the expense of being under the dominion of Mr. Putin, it may be a costly gain for those folks, as the oligarchs are hungry for more.            

MarketBullets® Friday, Jan 31, 2025: Close

·        Chicago wheat was down 7 cents on Friday to net a 15-cent gain for the week.

·        KC Hard Red Winter (HRW) was up 21¾ for the week, the strongest week since the first week of October 2024.

·        Minneapolis Hard Red Spring (HRS) was up 20¼ to its highest close since Mid-October.

·        Paris Milling Wheat added 6.00 (about $.17 per bushel) for the week.

     Corn, the leader of the grain complex on the upside for many weeks, netted minus 3 cents on the week, throwing a small signal of direction change onto the charts. Exports have been the driver on the rise, with Mexico as frequent buyer. Now “The Tariff Question” may pause the move. U.S. Corn shipments for the marketing-year-to-date are at 824 million bushels, 183 million better than last year’s pace, and the strongest since 2007-8.

     The Buenos Aires Grains Exchange (BAGE) says Argentina’s corn crop is 28% excellent, down 2% from the previous report, with poor condition at 22%.

     The markets are all presently subject to Tariff Impact Reaction. Mexico, our best wheat export country of destination is on the target list until U.S. border agreements are in place. All eyes will be on the reaction of Mexico’s administration. This is less about trade issues, more focused on immigration management.

     The wheat trend is still categorized as positive. It’s just early for a big run. The funds have continued to add to their short-sold positions in Chicago wheat.

 More updates pending.

MarketBullets® Friday, Jan 31, 2025: Pre-Dawn 

     The markets are at a kind of “shrug of the shoulders” moment. Wheat is more dependent than usual on corn and soybean strength for moral support, as corn has been on a sky-ride since last August’s 6-month-old lows, gaining a dollar per bushel, back to levels not traded since December of 2023.  The large Speculative entities reported by the Commodity Futures Trading Commission (CFTC) have accumulated a net position of almost 393,000 contracts on the long-bought side. The last time the Specs held such heavy corn longs was in June of 2022. This has occurred only two other periods in the record books; once between 2010 - 2011, and again between 2020 - 2022.  This is all great, but the peaks are where we look for selling opportunities rather than buying. If corn runs out of buyers, then the weaker sister grain – wheat – will be looking for inspiration. The picture has been positive and there is no  red light flashing, but this market could change to a short-term negative very quickly, especially  if the funds get spooked and all want to reduce exposure to that heavy corn.

     On the other side of the trading pit, wheat is seeing the funds carrying a net short that has similar historical significance to the corn long. There is firepower underneath the wheat, but although the market lacks only a fuse, there is nothing fundamental in the picture (yet) to touch it off.

     The setup for pending volatility is strong, with tariff questions all over the world. Anxiety over how the next few weeks play out in international trade relations is going to be a dominant theme. Many traders in a wide swath of markets will become more conservative until they are able to perceive stability (including the big trading funds).

     This is just the environment in which Trump sees an advantage in negotiations. Especially with both Russian and Chinese economies in disarray. For us it is appropriate to remain as aware of the changes as possible. In such an intense global trade environment it can be difficult to see through the thicket of dis-information to know the underlying causes of market changes. Unless there is pure chaos, the effects will often be visible on the charts before we can absorb enough information through the regular channels to understand. Even if there is an apparent sense of stability, it is essential to be prepared for nonsensical data and incomprehensible reports.

     Just remember your training; If you allow yourself to become anxious or angry, you are at a serious, inherent disadvantage in any competitive decision-making environment. Let’s stay cool and focused.

     The trend in wheat is showing more positive life than it has in many months, but it is vulnerable and lacks a story of its own. The Box-o-Rox 60-day moving average is a very crude indicator, but the price of Chicago wheat is above that green line right now, if only a few cents. If it drops back below the line again, it is a sign to proceed with incremental sales of wheat, either old or new crop. If it seems like it is too low to sell outright, you can use your merchant’s tools to either establish a price floor or to set up a buy-back of wheat ownership exposure. Call that merchant and be prepared. If the board stays positive, then no worries; hold on and ride that beast!

  Its the fourth day in a row for new all-time highs in gold futures, now up $260 per Troy Ounce since December 19.

Stay tuned in. This could become interesting.         

MarketBullets® Thursday, Jan 30, 2025: Pre-Dawn

     Paris milling wheat futures closed Wednesday on their week-ago highs. Wheat money funds in Paris (Yes, they have them, too) slightly reduced their net short-sold positions. Not a big deal, but a pre-cursor to more of the same.

     Russian wheat exports have dropped off as expected due to quotas and export taxes. Moscow is worried about the crop size coming up. Nothing will be measurable about that crop until it exits from dormancy.

     European wheat exports continue to lag, with the current marketing year to date total at -37% below last year’s pace. Their crop condition entering winter was much better than last year.

     Black Sea wheat export prices are higher in the last 2 weeks. Ukraine’s ending stocks are well below last year’s by some 26%, and Russia’s supply is suspect. This is a recently normal annual pattern for these sources of wheat. All eyes will be on the Black Sea region from now through emergence, probably the most significant known factor. Just the talk of Eurasian regional wheat crop weather will be enough to arouse the market at some point.

     India is looking at forecasts for higher than expected temperatures in February, threatening their wheat crop. With fresh memories of extreme heat damaging crops in their recent past, even though it is very early in the crop cycle for this type of event, the many small wheat farmers there are stressing.

     No interest rate cut this month from the Fed. The conclusion of the meeting this week met with no market shock. The Federal Funds rate target is 4.254% to 4.5% going forward, unchanged. For wheat marketers this is an indirect factor, leaving the cost of storage plus interest steady

     Generally readable in wheat futures spreads, already at sizeable carrying charges, with deferred deliveries rewarded with a premium.

     The markets are intensely interested in Tariff-Talk and have been drawing in a breath to see how the Canadian and Mexican 25% tariffs will play out. It seems that President Trump has to play this hand aggressively and its not likely that he will defer or soften before the tariffs take effect Saturday. The entire world is watching and taking notes on how he proceeds. For the wheat markets, Canada is a large source of wheat imports to the U.S., so there is a chance of some wheat price basis-shifts in the northern tier of wheat states as short-term demand markets adjust. Meanwhile many decisions are now going on hold as the new factors unfold.

     Uncertainty is often a negative factor for any markets.

     The pattern in Chicago wheat as bellwether is an emerging upward slope that is very young and seems very vulnerable. Thursday morning very early trade has pushed up a few cents and back a few, with no net gains as of about 3:00 AM Pacific Time. Its too early in the season to look for dramatic movement on crop condition, cold or not.

     It may only be for a moment, but Chicago is trading about 7 cents above our famous “Box-o-Rox” 60-day moving average, lighting the “hold” key. This is a tenuous foothold, but we will honor it (with our finger on the “sell” button for any scheduled incremental wheat sales in the plan).

Another new all-time high in Gold futures at $2,818.30 Per Troy Ounce in very early AM trade on Thursday January 30, 2024. There is no sign that gold is slowing in its climb. There is demand for gold, probably in China, at least, as wary and conservative citizens take measures to protect their private legacy wealth as the Chinese economy wobbles. The same many others around the globe.

     Stay tuned for the “Tariff Show”, not just to see what President Trump will do, but how the crowd will react, as well.

MarketBullets® Wednesday, Jan 29, 2025: Pre-Dawn

     New all-time high in early Gold Wednesday morning futures trade. Inflation? Declining interest rates? FOMO? The character of this brand-new high will tell us much about the global markets in general.

     Diesel has dropped back to levels traded in the first week of January. Diesel futures market spreads are moving toward greater inversion (Front month delivery contracts higher than deferred), suggesting a change in supply/demand balances with either less supply or more demand for short-term deliveries, a price-positive pattern.

     There is no sign that corn is weakening, having hit 3-month highs following 4-year lows. This is presently a somewhat more than normal positive influence for wheat prices. A change in corn to a downward price slope would be felt by the trade.

     At current prices, the incentive on wheat producers to liquidate is small. There is no signal to sell and no signal to buy, so “hold” stands until there is a price movement that reveals the next chapter. The spring season is when more and more of the northern hemisphere crop is made, as days lengthen, temperature rises and moisture becomes money. That period has not yet begun in earnest, so we pay to hold unless there is a bill to pay.

     The charts will begin to confirm any fundamental changes before they hit the wire services.

     “Failure” to make a new low on wheat charts is the first element of an emerging longer-term low. We have that…for the moment.

It’s trackable. Let’s track it! 

MarketBullets® Tuesday, Jan 28, 2025: Pre-Dawn

     Chinese New Year holiday starts tomorrow (Wednesday, January 29) and amounts to approximately a week of market closure in China. The effect on global wheat and other market pricing is lower total volume, but no disruption outside of China.

     There was a brief trade tangle over the return of two planeloads of illegal Colombian immigrants to their nation of origin. The disagreement was settled quickly, with the help of new Secretary of State Marco Rubio after a threat of tariffs on Colombian goods to the U.S. was made. The immigrants were allowed to be returned, and trade with the third-largest U.S. corn consumer in Latin America emerged intact. If there is a wheat market influence it is on other importing nations observing the process and taking notes. This process could be interesting.

     Accumulated U.S. wheat exports marketing-year-to-date for 2024/25 are still up 21% from 2023/24 same week, although that net gain has slipped a few percent in the last 5-6 weeks.    

     West Texas Intermediate (WTI) crude oil is trading below $74 per barrel, but has not broken to the downside, as it must go below $65 (last September’s low) in order to create a breakdown of the 4-year-old declining pattern. January to date, the front month contract for WTI is still net up $1.78. The Trump administration has indicated that they intend to stimulate U.S. domestic production, but the is not a “snap of the fingers” kind of intervention.

     Diesel is down about 25 cents per gallon since January 16, but that is in the context of an expanding upward pattern.

     Gold is within $25 per Troy Ounce of its October 2024 all-time high of $2801.80. The market still sees global risk and is seeking storage of wealth, especially among the Chinese.

     Big-picture, long-term interest rates are still rising, just another indication that the market sees risk outside of the U.S. Dollar. We watch crude oil, gold, interest rates and Ruble, Yuan, Euro-Dollar exchange rates for early warning signs of market trouble. The general market seems calm enough, but the tariff game is about to begin. Sensitivity to the overall markets is gaining influence over factors.

     The largest potential wheat-price positive factors is still continental wheat crop weather on emergence from dormancy in 6-8 weeks for the northern hemisphere. With so much of the global wheat production concentrated in so few areas, (Russia, China, North America) the spring weather will be the “factor of choice” for wheat market upside power. The wheat price has been in a flat to slightly lower pattern since Christmas of 2023. This has been tough to thrash, but the longer it lasts at this level, the more vigorous the emergence from it will be, and the upside is larger than the downside. This vague but nonetheless specific perspective calls for patience and alertness. When the upward move finally arrives (and it will arrive somewhere along the line), it may be attended by anxiety and eager sellers, making it a challenge to capture. No matter how crazy the market gets, we will see the changes here and discuss them.

     Stay on the beam. Stay awake. There is potential in this market, but also lots of risks that deserve deliberate attention.

MarketBullets® Monday, Jan 27, 2025: Pre-Dawn

     On Monday the 27th of January, just before 3:00 AM Pacific Standard Time (GMT-8), Chicago March delivery contracts were trading down about 2½ cents per bushel. KC Hard Red Winter (HRW) milling wheat contracts were off about 1½, and Minneapolis Hard Red Winter (HRS) March futures were just down ½-cent. Volume of trade was low. Paris was trading unch.

     The last CFTC report shows the large speculative funds carrying a cumulative net short-sold 73,000 contracts (365 million bushels equivalent). This is historically significant, as those entities have held such large levels of sold futures contracts during only two periods previously; the two-year period between January 2016 through January 2018, and anther brief span between March of 2023 through December of 2023. This large pile of shorts will eventually have to be “covered” or bought back in order to take profits or prevent losses. This overall market event is normal, but will require still another event that stimulates the fund manager to take buying action. If they all try to cover at the same time, the market can become quite violent as they all try to buy at once. The volatility spikes and the price can jump so quickly that many traders are left behind. For us marketers, it’s a treat, like a big drink of water after a long desert hike, but it is usually brief, unless what spooks the trade into a buying frenzy is a real thing, like very bad weather in Russia’s wheat patch. There is no way to predict when this “short-squeeze” may happen, but there is powder in the keg now.

      Argentina’s government is cutting export taxes for wheat, as well as beans and corn. This is a reflection of a government administration that understands that farmers must be  allowed to be profitable, and that this will lead to government income as well. Argentina is capable of globally dominant wheat marketing. If their new administrative vision persists, they may arise quickly to their former glory as southern hemisphere wheat price setters.       

     In the U.S., for the moment, trade tariffs remain confined. As the new administration positions and prepares to negotiate, the likelihood of large and sudden disruptions to the flow of wheat trade is low. There is a marked increase in conciliatory speech from many U.S. trade partners. It is known that in the end, there is no real winner in a wheat trade war based on tariffs, as has been proven before. The price of wheat is well optimized by the free market, so interventions affecting price very rarely increase prices received by the producer. Wheat Growers have a good team in Washington, D.C., able to make this clear to congress and the White House. The market is not taking the talk very seriously (yet), but it will be visible if it begins to do so.

     The trend in wheat is narrow and flat. The boundaries are known. The requirement on us is patience. It is reasonable to examine pricing tools for wheat sales that allow re-buying wheat market risk after a cash sale, but it is not for every operation. Call your merchant and ask how to hold onto upside potential. There is a cost to such measures, but it need not be exorbitant.

Stay tuned. It gets better.  

MarketBullets® Friday, Jan 24, 2025: Pre-Dawn

     As I sit here typing furiously away*, I see that the wheat market gapped 4½ cents lower on the opening of Friday’s session (Thursday evening). This is not the kind of behavior that shouts, “prices must rise to ration supplies among the hungry buyers.” It is more like the nervous and sensitive action of a group of speculative traders, some of whom are carrying large short-sold positions that were threatened by the 20-cent pop Tuesday.

     The technical charts approach to detecting price turning points is an essential focus for staying on a trend. It is important because the change of trends is the only thing that prevents us from becoming hideously wealthy from trading perfect trends forever. The better we identify changes in trend, the more powerful our marketing program will become, so the profession of “Trend Whisperer” becomes more attractive. All it takes is about 40 years of study with plenty of mistakes included. Please try to work all the way through the next few paragraphs. This is the stuff that can build confidence if you internalize the process, which takes patience.

     The price of the Chicago lead Soft Red Winter (SRW) futures contract (March’25 delivery) and the KC Hard Red Winter (HRW) contract, have reached up and touched a 61% retracement of the last move down from the Early Oct’24 high. This renders the Fibonacci analysis completed for that small move. Minneapolis Hard Red Spring (HRS) has lagged the market and has not reached the same retracement level, but remains in a very small positive pattern.

     This retracement application bears a reasonable reliability, so that leaves the market without a short-term upside target. A longer-term upside target remains at $6.87 (32% of the downward price change from October 2022) unsurprisingly also the spring 2024 highs.       

      Chicago weekly charts show three (3) very slowly descending lows since Christmastime in 2023. The first at $5.27, the second three months later at $5.23 and the third in August of 2024 at $5.14, a major low that dates back 4 years to August 2020. Since that little pattern has matured into a long-term base formation, it has produced a slightly higher low at $5.26 in the first week of the current month, January 2025. It has taken over a year to build this base, which has validity as a price zone the market does not perceive as necessary to break. Physical wheat has continued to move easily into buyer’s hands from Russia and the U.S. has been able to improve exports over last year’s pace by about 24% to date.  

     If that FW Jan low fails, it will be a warning that the August $5.14 low is vulnerable. If this happens, gauging by the speed and volume with which the line is broken, it should be much easier to assess the power of the sellers to push much lower. The funds have already committed capital to selling and are already carrying large, short-sold positions. The setup for a major low would then be created.

     Meanwhile, the longer the base holds the more valid it becomes as a measuring stick. A break out to the upside, e.g Chicago March above $6.17, will also be a significant event and will focus attention on that previously mentioned upside target at $6.87.

     If you have arrived at this point confused, and are asking, “so what?” no worries! It will all unfold right here as it happens. The market does not care if we understand it, but it can be tracked.

It’s trackable. Let’s track it!

*Thanks Jerry!

MarketBullets® Thursday, Jan 23, 2025: Pre-Dawn

     The U.S. wheat complex is at a tipping point. To go forward, there will have to be some money moving, which in turn requires a stimulus…something that will motivate enough buyers, either to cover short-sales that have accumulated in the hands of the big funds or for inspired coverage of needs into the future. The 20-cent upward shot of Tuesday’s trade was an example of the kind of activity that we must see to accomplish anything. At the moment this cylinder is mis-firing, having surrendered about 30% of Tuesday’s gains.

     It's too early to count Russian crop losses, or any winter crop damage for that matter. The pending Tariff/Sanction negotiating game is only just opened, so the global traders are waiting for the cards to be dealt. Iran and Syria are either licking their wounds or arguing amongst themselves over who is in charge, while any new developments in Ukraine are not likely to change much until winter eases its grip. This leaves wheat in a trough near the long-term lows, with only a recent one-day price pop to hang onto.      

     Wednesday’s trade ended up on a whimper, with Chicago down 4 cents, KC down 1 cent and Minneapolis Hard Red Spring (HRS) up 4. Thursday very early trade is soft and weak, with the red wheats all even to down 2-4 cents. We will measure the truth of Tuesday’s rally with how the market treats it in the next couple of sessions; either repudiating it entirely and returning to the narrow range sideways pattern, or acknowledges it and works higher.   

     China has stopped soybean imports from five Brazilian trading firms, faulting the failure to meet phytosanitary requirements due to contamination from insects or chemicals. This may explain the recent purchase of U.S. origin soybeans, instead of political values.

     There is a major shift in wheat trade that has been in-process for the last 20 years. Where the U.S. once dominated the global wheat export business, Russia has ascended to the leadership of the wheat movement. In the last 20 years, Russian planted area (+47%) and yields (+33%) have overcome the curves in the U.S. significantly. U.S. planted area is smaller (roughly -40%) and yields mildly better from +2-11%). The trends are strong and not likely to change much in the next few years, and once the Ukrainian invasion by Russia is halted or ended in some way, there will be more hectares of wheat in production around the Black Sea region than ever before. This is not a short-term factor, but must be accounted for in long-term analysis of wheat prices and trade patterns, as well as in national security and revenue aspects.

The top five wheat exporting countries by market share in 2023 were: 

• Russia: 16% of global wheat exports

• Australia: 15.8% of global wheat exports

• Canada: 15% of global wheat exports

• United States: 10.4% of global wheat exports

• France: 6.7% of global wheat exports

The top 15 wheat exporting countries accounted for 91% of global wheat exports by value in 2023.

     We will examine this fundamental configuration more in pending work.

     Meanwhile, the wheat market is not threatening, nor is it getting frothy on the upside. We must await further data.

Stay tuned. 

MarketBullets® Wednesday, Jan 22, 2025: Pre-Dawn

     Wheat complex prices rose rapidly in Tuesday’s post 3-day session. Many observers attributed the rise to a weaker U.S. Dollar, although that influence is not often as direct as it is convenient to suggest. At least some of the buying power must have come from optimism about Chinese demand for wheat based on the new administrations approach to trade. The technical base for a rise in wheat may be stronger than the wire news influence, as wheat futures have held above the sensitive low side base for many weeks, leading to a reassessment buy funds as to its downside profitability. One up day does not make a trend change, but the chart pattern is changing.

     The Russian Ruble is rising against both the Yuan and the U.S. Dollar. The U.S. Dollar Index only has one Asian-Pacific currency as part of its makeup; Japanese Yen. Most of the non-U.S. dollar denominated wheat sales from the U.S. do not involve the European zone currencies, and the Index does not account for Chinese Yuan, which must be observed separately. In recent days the Yuan has risen versus the Dollar, but not in proportion to the movement of the Euro-oriented Index.

     Chinese customs reports showed December wheat imports of 150,000 tonnes, a very weak, minus 75% versus last year’s pace.

At 42% through their marketing year, Canadian wheat shipments are at 44% of the Agriculture and Agri-Food Canada (AAFC) projection.

     Russian wheat export are slowing dramatically, as expected. Export quotas were set this marketing year at lower amounts, mostly due to caution based on a poor wheat crop condition entering winter. There is little indication of moisture improvement to date.

     US. All Wheat marketing year-to-date shipments are at 13.279 million metric tonnes (487.9 million bushels), 23.83% above from last year’s pace at this date. 

     Chicago wheat contracts have reached a positive net price change Year-to-date for the first time.

Gold is approaching a new high.

60% of the world’s wheat is produced by only four (4) countries (regions).

If there is a fundamental base for wheat price increases in the future, it must include the fact that when so much wheat is produced in so few regions, the weather risk represented by any one of those regions becomes larger.

The new year seems likely to be a better wheat marketing year, but it will require more attention and planning.

Stay tuned.

MarketBullets® Tuesday, Jan 21, 2025: Mid-Morning

Wheat futures are behaving in a more positive way than we have seen since early October 2024, seems like a long time ago (3.5 months). Heading into the final half-hour of Tuesday’s trade, the lead contracts are up across the board in the U.S., while Paris is up 4.50 per tonne (13 cents per bushel). There are no fundamentals that have shifted. Its more like an attitude adjustment, as the new Washington, D.C. approach seems to have caused at least a small wave of accommodative language from China, while Israel is taking a break from aggressive war applications, allowing some attention to be focused on U.S. trade relationships.

The current price as of mid-session Tuesday in Chicago is just above our “Box-o-Rox” indicator, (a 60-session moving average) for the first time since late October, 2024. If confirmed by a close above the line, the signal thus created is “hold sales” as prices rise. This indicator is not intended as a short-term trading signal, but a trend ID. There are dozens of ways to tweak the idea, to creatively improve the “system”, but the basic concept is just a simple indicator with a red-light/green-light. The fact that the market has been able to reach above the line for a couple of hours is a beginning. We will soon see if the funds perceive that its time to exit some of those accumulated short-sales.

At least its better-looking. There is change in the wind!

Stay tuned.

MarketBullets® Tuesday, Jan 21, 2025: Pre-Dawn

     The opening hours of the new Tuesday session (on Monday night) showed more enthusiasm among wheat buyers than we have seen for weeks. This alone must not be interpreted as the birth of a new uptrend, but every uptrend has to begin this way. If we are to follow the trend, then this is a little arrow scraped into the sand pointing north, but the big picture remains flat to negative on weekly or monthly charts.

     Wheat shipments from the Black Sea region via the Suez Canal fell by about 40% in the first half of January to 0.5 million metric tons due to attacks in the Red Sea and Gulf of Aden, according to the World Trade Organization (WTO) Thursday. Consumers affected are mostly in Asia and East Africa. The alternate route is long, typically around the Cape of Good Hope at the southern tip of Africa, adding approximately 6,000 nautical miles.

     Since the cease-fire between Israel and Hamas, the Houthi rebels have declared that they will cease attacking shipping in the Red Sea except for “Israeli-associated” vessels. Most shippers have declared the Red Sea off-limits until it is safe to return. Red Sea transits usually account about 42 million metric tonnes of wheat export shipments each year. The current status of the Suez is a wheat price-negative factor for producers due to rising costs.

     Egypt has recently signed several private “agreements” with European wheat producers without using the “open tender” approach, making the transactions much less transparent, a new pattern that is a potential long-term negative for competitive wheat merchandizers.

     A rising U.S. Dollar and lots of wheat for sale around the global marketplace remain as the big challenges to any significant price rally for wheat. Winter damage to wheat is difficult to measure at best and it is potentially misleading.  

     The latent potential positive factor is that the funds are heavily short-sold in Chicago, last assessed to have a net 82,209 short contracts. KC is also net short 20,744 as last reported by the Commodity Futures Trading Commission (CFTC).

     No mandate. The bait is in the water, but this is a big, lazy catfish of a market right now.  It will take time to develop the next move. Stay on the charts for the early warning.

It’s trackable. Let’s track it!

MarketBullets® Friday, Jan 17, 2025: Close

     No markets Monday, January 20, 2025 for concurrent Martin Luther King and Inauguration Days.  

      Chicago closed out the week heading into a 3-day market break with a plus 8-cent net and the lead among wheat contracts. PNW soft white wheat closed the week and the monthly-to-date net unch at $5.90/Bu. On the negative side, Paris and KC Hard Red Winter (HRW) ended the week with lower prices, minus 2¼ for KC and minus 17½ per bushel in Paris Milling Wheat. On the whole, a flat or negative week for wheat.

     Corn and Soybeans both gained about 25 cents in their leading futures contracts on the week, with China showing up to buy a vessel or two of beans.

       US weekly wheat net sales for the 2024/25 crop year were much better than the last couple of weeks, at 513,400 metric tonnes for the week ending January 9, 2025, about 55% greater than the prior 4-week average per the USDA’s Jan 16 report. Year-to-date cumulative U.S. wheat exports for the 2024/25 marketing year stand at 12.56 million metric tonnes and are up 23% from the same date last year.

     Institute for the Study of War (ISW), January 17, 2024: “The Israeli security cabinet approved the Israel-Hamas ceasefire-hostage deal on January 17. Israel’s full cabinet began deliberating on the deal on January 17 but has not released a decision on it as of the time of this writing. The full cabinet will very likely approve the deal, given that the security cabinet recommended the deal’s approval.” Hostage-Prisoner exchanges should commence at 0900 ET on January 19 (Sunday), according to the Israeli Prime Minister’s Office. The effect of this agreement is not a direct wheat-market price mover, but it may give rise to a relief-based improvement for global trade in general.

     The wheat market trend remains flat and is trading very near long-term lows. Both fundamental and technical factors are at low trading energy levels, but the potential for volatility remains high.

Tracking a market is like tracking a predator; sometimes it will lie down, sometimes it will run, and sometimes it will attack. It should always be approached with caution and two plans, “A” and “B”.     

MarketBullets® Friday, Jan 17, 2025: Pre-Dawn

     Virtually all of the calendar futures spreads among the wheat complex in Chicago, KC, Minneapolis and Paris are moving toward greater carrying charge structures. As deferred contract prices are holding value relative to nearby contracts, the intuitive understanding of the complex is that the demand for supplies of wheat in contracts that are earlier in delivery is weaker than for later ones…a hallmark of a negative fundamental price environment.  

     The International Grains Council (IGC) this week increased their world wheat stocks estimate by 2 million metric tonnes (about 3%) to 265 million, which is still an 8 million tonne reduction from last year. 

     The International Grains Council (IGC) puts global wheat output at a record 805 million metric tonnes in 2025/26, up by 1% over last year.  

     The Council has lowered its total world grain production forecast by 7 million tonnes to 2.305 billion tonnes for the 2024/25 marketing year, almost entirely because of adjustments to corn.

     Argentina’s wheat harvest is in the bin for a total of 18.6 million metric tonnes, with an average yield of 33.3 bushels per acre per the Buenos Aires Grains Exchange (BAGE) report Thursday.

     US weekly wheat net sales for the 2024/25 crop year were much better than the last couple of weeks, at 513,400 metric tonnes for the week ending January 9, 2025, about 55% greater than the prior 4-week average per the USDA’s Jan 16 report. Year-to-date cumulative U.S. wheat exports for the 2024/25 marketing year stand at 12.56 million metric tonnes and are up 23% from the same date last year.

     Chicago wheat is back to Monday’s prices, after a quick trip up to $5.52 now trading around $5.36. The range is narrow, so we get excited about 15-cent moves! Today’s trade is only a dime above the August’24 lows, which was a low that dates back to August 2020. It has always seemed that there is a little fatal attraction effect when any market trades for such an extended period this close to long-term lows, but it has also proven to be impulsive and a little foolish to anticipate such a low being  broken. Either side of this line, if realized, has the potential to be explosive. Time to pay attention and get a read on the market’s intention. Be prepared to sell a slice if the lows break.   

     Gold is pressing for a possible new high. Crude oil is also showing some upward inclination (see also Diesel). Interest rates have eased off of recent highs. Inauguration Day is the 20th, Monday – also Martin Luther King Day, a non-trading day.  

Stay Close.

MarketBullets® Thursday, Jan 16, 2025: Pre-Dawn

      Bla blab la geopolitical tensions – bla blab la economic policy uncertainty – bla bla bal ceasefire celebrations and some hostages home – bla bla bla good crop weather – bla bla bla bad crop weather – bla bla bla war in Ukraine, North Korean soldier prisoners of Ukrainian troops.  All of this is old news, all well known and parsed by the market and only when one or more of these factors change will the market move.

     Chicago Soft Red Winter (SRW) wheat prices have created a classic “lower lows and lower highs” pattern with a regular, 3-5 session downward, 5-6 sessions upward” rhythm for nine (9) cycles since the first week of October 2024, with a total decline of over $1.00 per bushel. This kind of regular sinusoidal behavior draws the short-term, under-funded trader into its web over time, but it’s a trap! The pattern will shift suddenly at some point, leaving a kind of procedural muscle memory that is difficult to overcome for traders, especially if they have been even moderately successful at capturing the pattern. There are many sorts of practiced patterns that are both valuable and hazardous to us in the business of marketing wheat. Relying on “Reversion to the Mean” is a common and useful example. We become imprinted with some patterns very quickly. There is a strong impulse to hold wheat unsold in the bin because of one sweet example years back when we received the top price of the year because we held on longer than wisdom suggested.  

     This is where the value of a marketing plan helps overcome those impulses that can become wildly expensive as the market runs lower than was conceivable months ago. If we find ourselves in this trap, where we held on too long, holding on longer is the impulse, and that is the heart of the problem and a bad habit to feed. Make a plan and run it according to the careful thought process that was laid out when there was no psychological pressure. Year on year, that plan will yield better than any “hunch-driven” program, sometimes very dramatically better. If we can go a decade without making any “large” marketing mistakes, the compounding effect is astonishing. Of course, you already knew this. It just bears repeating from time to time.

     The trend in wheat prices is flat to slightly negative, with a downside potential still intact if the bottom of the range drops out. There is a very large upside potential, but in the absence of a large “black swan” event, that will take quite a bit of time to work itself out. Meanwhile, make the sales on schedule, study the “re-buy” tactics and review them with your merchant, with consideration of the risk. Use what would have been paid in storage to reduce the cost of those tactics, as you execute them only when the trend is in your favor. The savings in storage charges and interest costs alone can sponsor the moves.      

     The trade news barrel has been scraped and rinsed. Something new is coming, but we just can’t see it yet. It will show first on the charts.

Stay tuned. We will see it.

MarketBullets® Tuesday, Jan 14, 2025: Close

     Wheat prices are getting some lift from corn and soybean strength. Corn was up to its highest lead contract price since December of 2023. Soybeans front month contracts are up 42 cents to date in January. Wheat is nearly unchanged year-to-date, but has recovered nearly 20 cents from its lows in Chicago, KC Hard Red Winter (HRW) about the same as Chicago, while Hard Red Spring (HRS) is lagging the others with only a 7-cent bounce from early 2025 lows. No change in flat trend range (yet).

     Kazakhstan, The Black Sea region’s “other” wheat producer, has produced its biggest wheat harvest in years, with 661.4 million bushels thrashed. This is a large “politically independent” country bordering south-central Russia, with a long border on northwest China.   

     Sovecon (a private Russia-based analyst) estimates that Russian wheat exports in January will be 73.5 million bushels, 41% below December’s volume. This is not a surprise, as the market has anticipated new export sales quotas in the new year, due partly to poor winter wheat crop condition entering the dormancy season.

     Monday saw the best single-session gain in Chicago wheat since last October. Its time to pay attention for a bit, to see if there is more to come.

Stay tuned!

MarketBullets® Monday, Jan 13, 2025: Pre-Dawn

     Very early AM trade in Chicago Soft Red Winter (SRW) wheat futures showed a positive tilt, but remained well within the trading range from Friday’s post-WASDE report behavior. The whole U.S. complex was from +2 cents in Minneapolis Hard Red Spring (HRS) to +6 in Kansas City Hard Red Winter (HRW). Paris -Milling Wheat has been trading in a more positive Chart pattern than the U.S. wheat, mostly due to a very short 2024 harvest and slowing Russian wheat sales.

     The overall pattern for wheat is a stable sideways trend that is perilously close to a significant low that if realized, would likely trigger some vigorous selling by the money funds. Longer term, this trough may end up looking like an attractive base, but a failure of that base would make that a very expensive speculation.

     The outside markets, e.g. Diesel, the U.S. Dollar Index and Gold, are all stirring in price-positive ways.

     It is too early in the year during the northern hemisphere dormant season to attempt serious crop health analysis, which leaves us in a market driven by anxiety about competitive sales. Some regions, as in the PNW white wheat, have very stable markets that are unlikely to become volatile unless fundamental forces make a dramatic shift.

     Stay tuned. It’s easy here.

PS    This is the meeting and convention season. It is healthy to get out and visit peers and have a listen to what “The Trade” is saying. The internet is great, but person-to-person communication is still better. The Ai is still an infant, but once it matures it will be a challenge to all of us as we try to keep a handle on reality. We intend to stay in touch with our readers, so we are interested in your perspectives. Please use our contact form to comment or ask. It is reliable and we will reply to all. A direct phone call is fine, but hours are limited to after 10:00 AM PST. The best way to initiate a call is to text a convenient time for you, so we can arrange un-interrupted communication. (509) 540-4514.

-G     

MarketBullets® Friday, Jan 10, 2025: Close

     The USDA reports did kick some volatility into the wheat price…for about an hour, then the market settled back into the same groove it has been in for weeks. Chicago March futures jumped 12 cents in the first 30 minutes after 9:00 AM Pacific Time, and then spent the balance of the Friday day-session fading. The trading energy came from corn, up 15 cents on the day, and soybeans up 27, both from smaller quarterly inventories. On balance the wheat price was narrowly higher in all but Chicago, which was down 3.

     The details: Wheat stocks-in-all-positions were pegged at a total 1.569 billion bushels versus known pre-report guesses averaging 1.573 billion (0.25%)…pretty much on the money. U.S. domestic ending stocks were reported at 798 million bushels, up 3 million (0.38% larger).

     Global ending stocks of wheat were reported at 258.82 million metric tonnes, up less than one million (0.36% higher).  

     U.S. Winter Wheat Seedings showed All Winter Wheat 34.115 million acres, up 725,000 from last  year. HRW: 24 million, up 213,000, SRW: 6.44 million, up 378,000, and white at 3.64 million, up 99,000 acres. The total acres exceeded pre-report ideas.

     Altogether, the wheat figures were uniformly very slightly negative, really unchanged. The end of the day showed reality; wheat has no new mandate. The sister grains may provide some support underneath, but we will still be depending on Russian crop health problems, or emerging drought in the U.S. as the only clearly visible potential factors with the power to scare the funds into buying back their profitable short-sold positions.

     Without collateral support from corn and soybeans, wheat prices would likely have eroded on Friday.  

     The U.S. Dollar Index continues to press higher (making U.S. origin wheat more expensive), as interest rates are still rising (making the cost of storage and operations more expensive). Meanwhile, Diesel and Natural Gas, which is about 65% of the cost of making anhydrous, are stronger than either contract has been since last summer. None of these developments are a surprise, but it can be handy to know their trends when formulating strategy.

     If corn and soybeans continue to be supportive, wheat has a chance to hold the line above recent long-term lows. The price of wheat is not attractive to producers, many of whom will only sell when cash is needed at these levels.

     There are technical retracement prices well above the current weak sideways price pattern, but it will require some more motivation than we see at present to move that far.  The trend is still flat to negative, but a large base is being built on the charts. There is no time limit on how long it may take for the market to chew through the wheat for sale, but eventually we will have a bounce. The problem is that it is getting more expensive to hold wheat off the market. The bottom of the range, a likely selling energy trigger, is less than 20 cents below current trade. The squeeze is on.     

     Stay on plan.  Make the incremental sales on schedule. Call your merchant and work on price flooring alternatives and possible re-owning wheat when the trend emerges (there is no reason to buy it right now unless you have deep pockets).

     It’s trackable, if boring at present. Let’s track it!

MarketBullets® Friday, Jan 10, 2025: Pre-Dawn

Regular commentary will be posted after the WASDE and Stocks reports. Very early trade on Friday was about unchanged, as expected ahead of the reports. Trade talk seems to be toward small adjustments or unchanged ending stocks. The January WASDE and Stock reports have traditionally been sources of enthusiasm among traders, but this one may be a dud. Even so, after the report the market may move, if just on having the report in the rear view mirror.

More later.

MarketBullets® Thursday, Jan 9, 2025: Pre-Dawn

     Jimmy Carter, the 39th President of the United States from 1977 through 1981, was the most recent of just 9 Presidents with farming backgrounds. Thursday, January 9 wheat futures day-session will close at 10:15 AM Pacific time / 12:15 PM Central in honor of former President Carter’s funeral. Government offices are closed Thursday for a day of national mourning. Trading will resume at 5:00 PM PST Thursday evening / 7:00 PM Central, and continue through Friday.

     NYSE and Nasdaq will halt stock trading operations for the entire day.

     USDA’s World Ag Supply/Demand Estimates (WASDE) and Q1 Stocks-in-All-Positions inventory reports will be released Friday at 9:00 AM PST Friday / 11:00 AM Central.

     The new USDA data will include the new Winter Wheat Seedings figures. The pre-report trade average guess according to a Reuters survey is All Winter Wheat acreage at 33.366 million, just 24,000 acres below last year if realized. HRW is expected at 23.73 million, SRW at 6.14 million acres and White Winter at 3.49 million acres.

     The pre-report average trade guess for this marketing year’s corn production is 15.095 billion bushels, slightly lower than last year. Average estimates for soybeans are about 4.453 billion bushels, the second largest bean crop on record.

     The trade will track the above guesses to compare to new figures from the National Ag Statistics Service (NASS) on Friday. The market’s first rapid reactions in futures prices will come from this quick look at expectations, while the longer time-frame price adjustment, if any, will be more profound and take longer to emerge. Enhanced price volatility is common after January reports, so post-report market reactions often include a “relief trading” volume increase as trades that had been held up ahead of the data-dump will then be activated.

       Wheat futures trade in the very early hours of Thursday was in a narrow range as of 3:00 AM, with Chicago down a penny or so, KC ¾-cent lower and Minneapolis Spring wheat trading very light volume with indications of less than a penny per bushel negative.

     The wheat complex trend is flat to lower, but still above the multi-year lows set last March and August. We will use those lows as marketing triggers, should the price drop below those points on the chart. With Thursday’s trade truncated by the Presidential funeral and Friday’s dominated by the digestion of statistics, the potential for volatile moves is increased. Many traders will wait for the reports to be completed before moving any money.

Stay tuned for more.

MarketBullets® Wednesday, Jan 8, 2025: Pre-Dawn

Kansas, Nebraska, Oklahoma and S. Dakota all received significant declines in estimated wheat crop condition from USDA on Monday. This kind of adjustment in the middle of winter dormancy season should probably be taken with a little reserve. The real test of crop health won’t come for at least another 6-8 weeks as the little Wheaties begin to wake up and draw nutrients. The market knows this. Still, this may be added to the “price positive” list that is helping to prevent a price drop below the long-term lows.

U.S. wheat inspections were better looking than the weak sales figures released last week. Total shipments were 412,342 metric tonnes, a 22% improvement over the previous week. Export shipments marketing-year-to-date stand at 12.72 million metric tonnes, 25.1% over year-over-year.

European wheat exports are 34% below last year’s pace-to-date.

Jordan has bought 2.2 million bushels of milling wheat from several vendors in an open international tender for shipment March/May.

There is much more data to be absorbed on Friday at 9:00 AM Pacific / 11:00 Central, with a the new  year’s first WASDE, including fresh production numbers and the first quarterly Stocks Report of 2025. The market is likely to be a bit subdued until those reports are released.

There is plenty of entertaining news in the mainstream media about Trump’s talk-talk as he stakes out various negotiating positions. It is remarkable how some entities are coming around to new philosophical positions all of a sudden. The markets are aware that it is all position and gesture so far, but Inauguration Day looms. This is just another reason for subdued behavior in wheat prices.

Wednesdays pre-dawn Chicago wheat futures session was down a couple of cents at 3:30 AM Wednesday morning. KC Hard Red Winter (HRW) and Minneapolis were both down 2-3 cents.

The trend in the wheat complex is grinding slowly lower, but still above the long-term lows printed last March and August. The factors bearing the most positive potential will not mature for some weeks yet. Stay on plan. Make the incremental sales on schedule. Watch the charts (the news wires are not likely to help much).

Diesel is rising.

There is value in the charts.    

MarketBullets® Tuesday, Jan 7, 2025: Pre-Dawn

     Recovering from holiday week(s) takes a few days, plus there are some large psych factors at work.

      Never lead your ace until you know where the trump cards are distributed. The markets are nothing if not great card players. The Trump inauguration (Monday, January 20th) is rapidly approaching, and he has made it clear that he will be active on day-one in office. This has the global markets in a thoughtful mood, even though there have already been strong indicators of what we should expect.  Trump is himself quite a card player, or at least he acts like one. Decisions are being slow-walked in the trade, as Trump seems bent on raising the stakes early.  

     The January USDA World Ag Supply/Demand Estimates (WASDE), plus the first quarterly Stocks-In-All-Positions report and new production numbers always make the January data-dump interesting, and sometimes there are fireworks, but Gabriel says that the algorithm is getting better and better at parsing the numbers, making large surprises less probable. The Ai is definitely going to play a role in this arena, but the trade still puts out guesses ahead of the report, and those pre-report guesses sometimes end up being more important than the actual figures that are released.

     Since there are no other “heavy-Chevy” factors emerging this week, the market is sensitive to money-movement. The funds have bought back (covered) some of their large net short-sold positions in wheat, both pre-and-post New Year. It has not been a large or dramatic move, but it is coming at a point near long-term price lows for wheat. There is some potential for buying enthusiasm if Friday’s WASDE gives even mild positive surprises. On the flip side, there is no room for error on the downside. A negative surprise will trigger selling.

      Sometimes in a poker game it makes sense to fold for a few hands, just to observe the other player’s eyes and possible tells as they work against each other. This is the strategy that seems most appropriate in wheat this week. The marketing plan that uses incremental sales spread throughout the year, with specific criteria for actions at each juncture, still has the best chance of preventing the “big mistake” that can kill a whole year’s worth of work in a quick hurry. On balance that means having a detailed contingency plan for reaction or non-reaction to the information that emerges from events like USDA reports or first-month-in-the-Oval-Office activities. This prevents hasty or ill-considered moves.

     Its funny how different a new Life-Of-Contract (LOC) low ($5.27 ½ in March Chicago wheat futures) can appear when looking down at it on the day it happens, to the way it looks from 40 cents lower.  New LOC lows are frequently followed by more new LOC lows, since the factors that give rise to them are usually still present for some time.

     Remember that buying upside coverage for a sale at LOC lows is easy and not hugely expensive.  It should done only when there are new upside reasons emerging. Also, keep in mind that whatever capital is put into this is speculative and can be a total loss, so it is not something to enter into lightly. Call your merchant and review the alternatives.   

This stuff is trackable. Let’s track it!

MarketBullets® Friday, Jan 3, 2025: Close

     Friday was a red day for grains. Corn lost 8 ½ cents on Friday but is up 18 cents per bushel since the first of December. Beans were down 20 cents and are unchanged since Dec 1. The net effect on wheat prices of the sister grains is neutral at this point. None of the grains tend to move very dramatically without at least a nod from the other two. Corn has been the leader on the upside since October, while beans have been unable to establish a trend for more than a couple of weeks at a time. Not much help here.

     Next Friday’s trade will be sponsored by USDA’s January World Ag Supply/Demand Report (WASDE). This particular report tends to produce some volatility, with final production numbers and Quarterly Stocks-In-All-Positions inventory reports, so many traders may be holding back until the report sets the stage for the year to come.

     Net short-sold positions held by the large speculative trading funds have accumulated to -87,266 short in Chicago Soft Red Winter (SRW) wheat, up from the first week of October at -6,132, about 90 cents above today’s trade. KC Hard Red Winter (HRW) has the same pattern (from -5943 to the present -17681). Chicago has seen only one other period with this amount of “big-trader” shorts since January of 2018. This is ultimately fuel for a quick rally later, but to ignite that little bomb we will need a hot headline or two.

     With Friday’s 16-cent pothole in Chicago SRW, minus 13 in HRW, minus 11 in Minneapolis Hard Red Spring (HRS) and minus 17 cents in Paris Milling Wheat, the wheat price trend is still in a confirmed flat to negative tone.

     It is not time to capitulate, but it is also not time to override the marketing plan. There are strategies that allow coverage of the upside if the concern is “Sold on Low”, otherwise known as “SOL”. It is often less expensive to do this if the forward cost of storage and interest is calculated and applied to the cost of such strategies. Stay on plan. Make the incremental sales on schedule.

Stay tuned, stay cool.      

MarketBullets® Pre-Dawn Monday, Dec 30 2024

     US weekly net sales of wheat for the week just ended 12-19 were 612,400 tonnes, a 34%  rise from the previous week and 64% above the 4-week average.

     Brazil is seeing increased estimates for December total wheat shipments.  

     Buenos Aires Grain Exchange (BAGE) estimates Argentine wheat at 64% harvested and 86% “normal to excellent” condition versus 58% this time last year.

     The markets are still in semi-holiday mode for the second short-ended week. Christmas week produced a net gain of 13½ cents in nearby Chicago Soft Red Winter (SRW) wheat futures, closing at its highest since December 16. KC Hard Red Winter (HRW) futures were up  10 for the week and Minneapolis Hard Red Spring (HRS) gained 5½. Paris Milling Wheat jumped the equivalent of 16½ cents per bushel.

     Very early Monday, Chicago was up 2¼-cents, about 20 cents above its recent December 4 lows. The 61-session trend channel is still negative-sloped. The last trading week of 2024 will reveal if the market can gather sufficient buying energy to push above the top end of the range. Final cash sales for the calendar year for tax purposes may provide a weight on prices, but they will have to be on the books by early Tuesday.   

     Wheat futures trade will close early on Tuesday, December 31 at 10 AM Pacific Time and will re-open on Thursday, January 2nd for regular hours.       

     The trend is still not healthy, as the charts still shows a pattern of lower highs and lower lows. A closing break above $5.69 would be a clear warning of upward forces in Chicago SRW, while a closing low below $5.29 would create a hole in the bottom allowing technical expectations of still lower movement. This environment is a “marketing plan delight”, with incremental sales of both old and new crop on a “go-ahead” basis. The downside risk is lower than it was a month ago, so many producers are likely to defer sales into the new year. It’s hard to fault this idea.

     There is little drama on the news wires, as the trade seems likely to remain muted until next Monday, January 6.

Stay tuned. Happy New Year.      

MarketBullets® Friday Dec 27, 2024: Pre-Dawn  

     Algeria completed a 1.1 million metric tonne milling wheat purchase on Christmas week in an international tender, sourcing from multiple vendors, mostly to be shipped from February thru March. Even though no U.S. origin wheat was involved, this kind of hefty buy gave the whole wheat complex some lift.

     This time of year, wheat is often sensitive to corn and soybeans as a market lead. Both corn and beans have come up off of long-term lows. Beans had been struggling until China stepped in and bought a few loads in spite of cheaper beans from Brazil. Corn has been in an uptrend since 4-year lows printed in August.

     Given the absence of global political or military drama, wheat trade volume is likely to remain slow in low volume until Jan 2. Money funds have mostly completed their year-end adjustments and the charts are not scaring them into any box-canyons. 

     The wheat price trend is sideways in a narrow range. The boundaries are well observed by the trade, so any breakout from the range is likely to trigger some trading energy in either direction.

We can track this market. Stay tuned.   

MarketBullets® Tuesday Dec 24, 2024: AM  

     Short hours Tuesday; futures close at 10:00 AM Pacific / Noon Central. Christmas Day Wednesday: no markets, then trade resumes at 6:30 AM on Thursday for a regular day session. Friday markets: open, regular hours. The volume is likely to be low this week, but that does not mean the market cannot move, only that most trade desks are short-staffed. Usually it is a quiet week.

     Chicago wheat was trading in its comfort zone Early Tuesday, a price zone about 15 cents deep that has held since last Thursday, Dec 19.

     Yesterday SDA reported net weekly U.S. wheat export loading inspections for last week of 403,719 metric tonnes, 34% over the previous week. Year-to-date shipping is 27% over the same period last year.

     Private estimates for the new year Russian wheat crop from Sovecon continue to portray a much reduced volume of exports, with a 17% drop from this year’s total, down to 36.4 million metric tonnes. It is still a long way to the new crop harvest from now.

     Slowing Russian wheat exports and a short production year forecast are the largest positive market influences at the moment.  

     The wheat complex is displaying a low-energy, “dragging bottom” pattern and tone. The funds have continued to add to their short-sold positions, even though there has been almost no profits from the move so far. It seems that there is no sight or smell of large predatory wheat buying factors lurking. With a relatively large position that has been added in a narrow range of prices, the speculative group is somewhat vulnerable. There is no corresponding potential rush-to-sell factor, so the current lows become a key backstop for marketing decisions. If the latest series of lows fail for any reason, it will still trigger selling energy.

     The emerging year has the potential to be very volatile, as threatened tariff impacts may come and go. With such a large proportion of the global expectation for wheat supply coming from a single producer (Russia), the possibility of a weather-related market shift is expanded, but political economics promise to be the less predictable large factor. It will require attention to the markets to execute a decent marketing plan.

Stay tuned.

MarketBullets® Monday Dec 23, 2024: AM  

     The next two weeks are holiday shortened, leaving the rookies running many trade desks. They have resources, including some food, some directives and house-keeping chores, but in general it is a quiet period. No serious trading decisions are likely to be applied unless there are headlines. The Boss has given the desk his personal phone number with strict instructions not to call unless the market or the office is on fire.

     Pressure to sell cash grain is just a tid lower, since Congress passed a bill Saturday morning that funds the government through March 14, including coverage for Farm Bill operations for a year.

     The early Monday wheat trade is slightly positive, with Chicago and KC up 6-7 cents, Hard Red Spring up 4½, and Paris up €3.75/Metric tonne (about $.11 per bushel). The pattern is sideways near key lows, following the same path since September.

     In order to prevent attraction of short-term technical selling attention, Chicago has to stay above $5.28 in the March contract, about a dime above current trade. If that tripwire is activated, the next lower support is around $5.14, a more serious break, since that low dates back to August of 2020 and below which there is plenty of technical room for more declines. The market is weak, and has no mandates to honor.

    Russian wheat exports are slowing, this week at 470,000 metric tonnes, about half of last week’s total. They have set their 2nd half of marketing year quota at 10.6 million tonnes, about 62% less than last year’s 2nd half limits.   

     Ukraine is apparently jumping to fill export slots that Russia might have filled with a 90% surge over the previous week’s general grain shipments for a y-t-d gain of 26%.   

     Word on the street has China’s Sinograin in the last week has purchasing 500,000 metric tonnes of U.S. soybeans for March-April shipment, following 750,000 tonnes last week, Brazilian beans are known to be less expensive. Hopefully they will not run another buying surge ultimately to be cancelled like they did with the 1.1 million-ton Soft Red Winter (SRW) wheat buy a year ago. Could it be that they are signaling Trump? Let the games begin!

     The Coceral yesterday estimated 2025 E.U. (including the U.K.) soft wheat production at 140.4 MMT, up from 125.5 MMT in 2024.

      We have become accustomed to the wheat prices in a sideways range since last September. The hazard here is becoming complacent and in-attentive, but it does seem like a good time to rest and ponder the big picture.

 Stay tuned.   

MarketBullets® Friday Dec 20, 2024: Pre-Dawn  

     French Farm Agency “AgriMer” has released an estimate of total domestic wheat exports below 10 million metric tonnes, 41.3 million tonnes below last year.

     New Chicago March Life-of-Contract (LOC) low on Thursday. On the continuous front month charts, Thursday’s low matched the November 14 low made by the now-expired December contract. The next (and last) lower target range is $5.14 - $5.19. After that there is nothing to call “supportive” until we go all the way back to late August of 2020, effectively erasing all of the “Russian Rally” created by a drought-damaged crop and a Russian invasion of Ukraine.   

     Rising interest rates: the 2-Year  Treasury Note contract is at its highest nominal interest rate since late July ’24. The 30-Year T-Bond is inches away from its highest close of the last thirty-two (32) years, helping to push the U.S. Dollar Index into its highest value since November of 2022. Think cost of storage, borrowing rates, national debt, expensive wheat…

     Copper approaching a key previous supportive price zone that has been uncovering increasing buying since at least July 2022 (2.4 years).

     Home Depot stock applied as a canary is pulling back, now about 3.8% below its highs printed just 4 weeks ago.

     It is already well-known that the Russian winter wheat crop has entered the winter in tough shape. It is also well-known that wheat is a tough grass plant and the crop is made in the spring, but tolerance for a dry spring is very limited. The Russian publication “Prozerno” put out a fairly hyperbolic warning in the first week of December:  “So, in Russia as a whole (excluding new regions) winter crops in good condition are only 5.48 million hectares, this is the smallest amount of good crops before entering winter in the last 23 years!!! Another alarming fact is that in the Central Federal District the share of bad and unsprouted crops is 62.2% or 2.07 million hectares, the situation is also bad in the Southern Federal District - 44% bad (3.07 million hectares), the North Caucasus Federal District - 29.2% (0.7 million hectares) and in the Volga Federal District - 14.1% (0.62 million hectares). At the same time, if in the southern regions of the Southern Federal District and the North Caucasus Federal District it is possible to improve the condition during the winter, then in the Central Federal District and the Volga Federal District it is extremely difficult, practically impossible, only if a comfortable spring allows winter crops to somehow recover... And the condition of winter crops is very bad in the new regions, but there, as in the South of Russia, an improvement can occur. The cause of the troubles is largely the summer-autumn drought of 2024. We will discuss this topic in detail at the Mountain Grain Assembly 2025 on  February 4-7, 2025.”

     The Russians are skilled at influencing the market price through publications, but the tone of the above article seems authentic, as though a bureaucrat is trying to get the head office to realize there is trouble brewing…

     Add together a strong U.S. Dollar, a rising U.S. interest rate (despite a Fed cut of .25% this week), lower gold, a lower stock market, coming firmly off of record highs, and it seems there is a messy change in the wind. This may be due to feverish political maneuvering in the U.S. over the public debt-limit games and fears of economic violence being stoked by those same game players, or that Putin is displaying his implacable and unchanged objectives…or maybe its just a bit of cycle-sickness. There is no mandate for a big change in wheat price behavior, but lots of speculation about what will come next spring. There is no real point to debating the condition of dormant or at least very sleepy winter wheat. Uncertain markets are often negative markets, as speculative money won’t buy and cash sellers won’t sell. SO…stay on plan, relentlessly make the incremental sales on schedule.

     The wheat price complex has moved down to lows that are challenging the long-term pattern. There is absolutely no meaningful buy signal at present, but there is a powerful impulse to hold onto wheat in the bin. That alone suggests that it’s probably a good time to let go of a sliver of wheat. Bear in mind that if you, having made some sales, dread feeling later that you might have missed the price-bus north, you can buy call options. Just don’t wait too long if the market has already begun to change direction. Have a plan for that, too. Call your merchant and do a little advance planning.

  The stuff is really trackable. Trust the track!  

MarketBullets® Wednesday Dec 18, 2024: Pre-Dawn  

     The “Aayy-Eye” is coming, encompassing all data, covering all possibilities and all risks, self-adjusting and self-improving. It is that for which all decisions become a mere ladder to the sky, possessing a power not “of the flesh”, but “over flesh”*, seductive and immovable in its correctness, implacable in its crushing of the old ways of navigating or managing. There is no-one who has not considered that he or she might be replaceable by an automaton, a golem that does not rest and only grows stronger as problems are encountered and solved.

     Traders have dreamed of finding or creating automated trading systems for many decades, since the first personal computer. I can recall using LOTUS 1-2-3 spreadsheets and a Commodore 64 to calculate moving averages in the mid-1980’s using a “massive” 10 megabyte external hard drive. It was like suddenly having a flashlight in the woods at night; we thought we had struck gold. Ever since that period I have watched as many thousands of dollars and many thousands of hours were poured into “systems’, each one intended to be “the one” that diverted some of the river of money flowing through the world into our pockets. There was always a better one. They worked, some astonishingly well…until they didn’t. It seemed that the rainbow pot-o-gold was always just ahead, but for most of us it was a will-o th’ wisp, leading on and on, but never arriving. Somewhere there must be a “Holy Grail” of futures trading; a “system’ that is always profitable, self-adjusting…right?

     Now it seems like the “Artificial Intelligence” in the news every day is just the latest and most interesting traders’ toy, one most likely to produce the “final solution”, but I have an intuitive perception that says, “no, there will never be the perfect traders program.” The basis for this hunch is that the market is a living creature with a will and intelligence of its own, and a survival drive that will foil any mechanical device, even one driven by a rocket powered intelligence. The perfect trading system would destroy the market. Either one person has it, which creates an impossible rate of return leading eventually to possessing all the money in the world. Or everyone has it, in which case we are back to the good old competitive trading world, where no one entity can dominate for long, as it really is not possible to know the future. The casino will escort anyone out the door who wins too much or too often. It’s a business killer, so “no, there is no sustainable perfect system.”  The AI will never catch a fish on a fly, right? Well...maybe, but you get the drift. Life and the living markets will adapt.

     Since we have disposed of the threat of the AI, what can be drawn here? It becomes clear that a detached, arm’s length perspective on the wheat market can be achieved without a supercomputer. That detecting a trend and either riding it like a surfer on a wave or avoiding getting run over by it is not just possible, but that we have been doing that for a long time, not just in the market, but in our lives. The objective for wheaties is being to take advantage of the natural market environment by being observant and thoughtful, staying out of trouble and capturing the trend when we can see it. We may use the AI for certain jobs, but it is not necessary and not appropriate to surrender out fate to it.  

     Wheat producers are inherently long all the time. The only questions are when and how much to sell. As long as the gobbermint protects the market to keep it operating freely, we have just one trading job, which is to sell efficiently. We can do this by tracking the trend, accelerating sales when the trend is against us and slowing sales when the trend is in our favor, with the objective of optimizing our marketing. We won’t always know what the trend is, but we will know enough to increase profitability by a percentage large enough to justify the effort. Every once in a while, we will dodge a big problem and every so often, we will capture a larger than normal bite of the pie. It’s the average per year that will keep us healthy. Its trackable. Let’s track it!

     The wheat market is in a “fair value” valley. There is enough wheat moving to take care of the world’s demands at the current price. The buyers are meeting the sellers. This is not a permanent balance. It will be changing soon.

     Winter wheat crops are in generally good condition for the dormancy season in the northern hemisphere, with the exception of a fairly wide sector of Russia. Wheat crops being made in the spring, there will be no decisive data for at least another 60-90 days.

     There is some percentage chance of a wide spring moisture problem for the Russians that could be a major factor for higher prices ahead. The private analyst “SovEcon” estimates recently that the 2025 Russian wheat crop will see 78.7 million metric tonnes, which is 3 million tonnes lower than their previous estimate, and below the USDA’s current 82 million tonne guess.

     The southern hemisphere total wheat crop is just 10% of the global production, making the seasonal swing a key to market price analysis. Even if the Aussies and the newly revitalized Argentinians are very aggressive, they can only have so much impact, even when as now they are also in good shape.

     The U.S. wheat price trend is weak, sideways and narrow. The good thing about a well-defined, narrow price channel is that it allows decisive actions on breakouts as they develop. Paris milling wheat chart is better looking, as Russia begins to slow down exports per quotas and taxes.

Wednesday morning very early trade has Chicago unchanged. Watch the channel for clues.

Stay tuned and we will see it as it develops.

MarketBullets® Tuesday Dec 17, 2024: Pre-Dawn  

     Saudi Arabia announced completion of a 804,000 metric tonne purchase of wheat in their international tender, some 150,000 tonnes more than expected.

     Russian shipments of wheat to Syria were suspended last week, but Ukraine has jumped to fill any needs. There is likely more to this than meets the eye. With Hamas severely reduced and Hezbollah on their  heels, Russian designs in the Levant are set back. The economic pressure on Russia due to their aggression in Ukraine is increased. The resolution to the conflict in Ukraine may be wheat price-positive if there is a violent climax, but in the longer run, all of those wheat hectares will be vigorously farmed, no matter who sits at the long tables in Moscow and Kyiv.

     In the background for wheat, corn is more supportive than soybeans as corn has found some healthy export buying, but beans are sitting sideways on long-term lows. Wheat rarely rallies very far without at least non-interference from the coarse grain sister contracts, so the environment is at least net neutral.

     Very early trade on Tuesday showed within 2 cents of unchanged across the red wheat futures exchanges.  It remains to be tested whether Paris can be strong enough to pull the global wheat price upward.    

     The trend for wheat remains sideways with just a slight upward bias, set in a set of tradable range boundaries. Stay on plan, The present trade is about 33 cents  below the 60-day, “Box-o-Rox’ moving average, which suggests continuing to make incremental cash sales as scheduled. There are marketing strategies that allow price protection with an open upside still intact. Call your merchant.

Stay tuned.  

MarketBullets® Monday Dec 16, 2024: Close  

     Sometimes the market murmurs like a sleep-talker about what’s on its mind (bear in mind that this reflects thousands of minds, including the infant Ai). On Monday the report came from the Commodity Futures Trading Commission (CFTC) that the large speculative trading entities have slightly reduced their net short-sold positions over the last week or so. That is only a slumbering twitch, but it is a required awakening sign for would-be buyers. Since there are few big price-influencing factors in play, the whole market is observing every detail, always a feature of slow and narrow markets. A trend following marketer has only to be both patient and observant in this environment. The challenge is to be prepared for at least a couple of different price scenarios.

     Monday gave us a mixed day across the exchanges, down 3 cents in Chicago, up about 2 in KC and down 4½ cents in Minneapolis Hard Red Spring (HRS). Paris gained €3.50 per metric tonne ($.10 per bushel equivalent). The Paris contract has become a key market of price discovery with regard to Black Sea wheat movements, if only because there is no other rational and transparent exchange closer to the Russian and Ukrainian export programs.

     The net tone is slightly positive, but still without substantial trend indication or any real buying or selling power evident.

MarketBullets® Monday Dec 16, 2024: Pre-Dawn  

     Argentina’s wheat harvest has reached about 64% complete. Buenos Aires Grain Exchange (BAGE) recently announced their wheat production estimate as unchanged at 18.6 million metric tonnes.

     Saudi Arabia last Friday issued a tender to buy 595,000 MT of wheat. Results are expected today (Monday) with shipping dates between February and April.   

     Ukraine’s Ag Minister on Friday increased their wheat harvest prospects for this marketing year to 16.2 million metric tonnes exportable.

     The value of Rubles per US Dollar and per Chinese Yuan, which has been weakening steadily since June of 2022, has pulled back from recent 33 months lows in a move that smells like Russian government market intervention, or maybe assistance from China. If that is the source of any Ruble strength, these sorts of market moves tend to be contra-trend and temporary in effect. This may be one of the only market windows that reveal the state of Russian economic. Please note chart(s) <here>.

     Crude oil has been steady in a range focused around $70 per barrel for West Texas Intermediate (WTI) for the last 4 months. The chart reveals a large descending triangle which is near to either confirmation or rejection. IF confirmed on the downside by a significant move below the $62-$64 range, the technical expectations will extend toward $51 per barrel, an undesirable level among OPEC members. If the price rises above $78.50 the target will be between $87 and $100.  The influence of Crude on wheat is indirect, but there is a positive correlation between wheat and crude.

     Diesel has been rising for the last 5 trading sessions and has returned to the top of a declining series of highs, an inflection point that may provide some new information if it is broken to the upside, otherwise the expectation will be a return to test the old lows about 15 cents lower than Monday’s early AM trading.

     The trend in the wheat complex is neutral. There are tight boundaries to the range in which Chicago Soft Red Winter futures have been trading since mid-November, a break of either side may yield a tradable move. For a wheat marketer, with a pending planned sale on the table, the most pressing event would be a drop below $5.40 in the March futures, about 17 cents below present trade and a trigger of undesirable momentum lower. This would make a logical spot to let go of a strip of wheat.  On the upside, the tripwire is at $5.69, about 13 cents over present trade. This is not exciting work, but it is at least quasi- logical.

Stay tuned.  There is more to come.

MarketBullets® Thursday Dec 12, 2024: AM

     The year in wheat is near complete.  The polaroids of New Years past are stacking together in a way that if you were to shuffle thru them at a certain speed (neither hasty nor lackadaisically but controlled and consistent) an impression of motion becomes available to the observer.  The visual cortex assesses the input coming from the thalamus and derives an estimate based on the sum of the images divided by the number of spaces between them and reports this data to the occipital lobe of the brain where the estimate is most useful in identifying all manner of threats and/or opportunities in the immediate environment.   Trends in culture, economics, politics, art, science and even the wheat market, are lining up such that each one seems to belong to a macrotrend proximate to a greater conjunction wherein these systems, previously understood to be stable and static are facing existential reorder of context, priority, and function.    

    IF we are able to grok the data’s relevance from the standpoint of an owner of wheat, an opportunity is at hand to make a valuable decision about what to do (or not do) despite the blurry outline of world supply and demand.  Wheat's value in a storage bin might begin to seem vulnerable to running aground in the shallows as the gravity of the macrotrend pulls the tide further from the shoreline while traders in waders sink in sandy muck with little recourse for protecting the commodity, and therefore revenue from fickle fate.

     Much like the flipbook of photos, the stochastics of the situation can reveal animations in trend tracking where the expansion of the seafloor and its grip on anybody caught unawares, grows lowly in potential until it can render any vessels and cargo stored therein unrecoverable and the owners forced to eat s slimy seafood supper of live bottom feeders sans nori or wasabi to protect their palette.

   SO, the lack of enthusiasm in the December wheat market can lead to dangerous complacency.  “As I am typing furiously away” (RIP Jerry Welch) the wheat market in Chicago is up 2 cents, inspiring more anxiety than enthusiasm.  Technically, the trend shows no evidence that the price must continue lower, while fundamentally, the news is bereft of any encouraging price influences. In the northern hemisphere, as log-able fieldwork hours shrink, the thinking season is at hand. The next year will bring some marketing challenges that can be planned against. It’s good to be ready when the moment arrives where implem-entation of a prepared, practiced performance can protect you from missing the sign or even pay you with a win. 

     We track this stuff. It’s definitely trackable. Some of the concepts that really help take practice.  Practice seriously, read and tell your friends to subscribe to the MarketBullets.

Stay tuned.

-Gabriel

MarketBullets® Monday Dec 9, 2024: Pre-Dawn         

 MarketBullets® Wednesday Dec 11, 2024: Pre-Dawn

     Wednesday early trade showed very narrow range trade in Chicago, up a couple of cents. KC Hard Red Winter (HRW) futures have put up a slightly more positive pattern than Chicago, but the general action is quiet, with low volume.

     SovEcon estimated Russian wheat shipments for November at 4.1 million metric tonnes, down from 5.6 million tonnes in Oct but above 3.4 million last year.

      Projected U.S. all-wheat ending stocks are reduced by 20 million bushels to 795 million, still up 14 percent from last year.

     White wheat exports are increased 15 million bushels to 210 million, on stronger-than-expected sales and shipments to East Asian markets.

     Projected 2024/25 global ending stocks are raised 0.3 million tons to 257.9 million but are still the lowest since 2015/16.

     There were no changes in Russian wheat numbers, even though many observers are projecting smaller wheat supplies out of Russia for the next year.

     The WASDE was a net mild positive for wheat, but near enough to what the trade had guessed that it was not a market-mover (December rarely produces surprises) . More data from USDA is due in the early days of January, with the 4th-quarter Stocks-In-All-positions Report and a fresh WASDE on Friday, January 10, 2025.

     The chart pattern for wheat is a very mildly positive 4-week rising triangle. There is very little momentum. The trade consensus is that without drama from overseas conflicts, or out-of-pattern weather issues, we will be in quiet price waters until January at least.

Stay tuned, even if only briefly every day. Stay on plan.

This stuff is trackable. Let’s track it!

MarketBullets® Monday Dec 9, 2024: Pre-Dawn         

     Accumulated U.S. wheat exports came out at 10.73 million metric tonnes (394.1 million bushels) and were up 32% from the same period in last year.

     Tuesday’s World Ag Supply/Demand Estimates (to be released at 9:00 AM Pacific, 11:00 Central) will review mostly demand-related factors. Average pre-report guesses from the trade based on a Dow Jones survey: U.S. Ending Stocks: 815 million bushels versus November’s official 816 million, World Ending Stocks of wheat for new crop (2024-25): 257.6 million metric tonnes, unch. Eyes will be on the Russian production estimate. The WASDE seems unlikely to spark price moves but cannot be ignored (yet).   

     The weekly Commitment of Traders (COT) report shows Large Spec entities net-short-sold at its largest since mid-April. In all of the data from January 2018 to present, the current net spec short-sold position is in the top 20% in size. These relatively large shorts will have to be bought back (covered) at some point, but to set off a rush to the exits and higher prices, it usually takes a trigger event, which the current market seems to lack.

      Egypt is continuing its experiment with various ways to procure wheat and other commodities from global sources, as in a recent attempt to secure massive long-term price-fixed contracts, more than half of Egypt’s annual needs in one swell foop. The idea being a tender request for commitments to some 3.8 million metric tonnes of long-term shipments. Global wheat exporters were wary of the terms, ultimately rendering the quote request unable to be filled due to requirements for financing, pricing structures and other risks. 

     Another avenue being pursued by Egypt, the largest importer of wheat in the world, has been private unilateral agreements negotiated directly with wheat sources instead of the efficient global tender system that has been used for many decades. This proposal, even as it has been promoted and encouraged by Vladimir Putin as a less price-transparent approach to commodity trade among autocratic states, is also perceived as threatening to the international tender system in which any qualified entity can participate.              

     Now there is a new wrinkle, as the Egyptian Administration has mandated that “Mostakbal Misr Agency”, an Egyptian military establishment, will assume all jurisdictions previously held by their General Authority for Supply Commodities (GASC). The impact of such machinations is unlikely to change the global wheat consumption patterns much, but reduction in price transparency in a competitive market is unlikely to be a favorable factor for sellers. More on this as it develops.

     The environment is dull, and December is a month abbreviated by a holiday week between Christmas and New Year. While Russia seems beset with issues like the collapse of their client-state Syrian regime and Iran’s problems in the same arena as Hezbollah struggles from an Israeli beating, wheat is moving easily in the global markets. Applying Paris Milling wheat futures as indicator, Black Sea prices are stable to slightly positive. The overall background is neutral, as the market hovers near long-term price lows. The trend is flat to very short-term positive. Price-driven motivation for cash sales is low, unless the price drops below the well-tested and defined low side of the recent range.

     It is reasonable to hold back on incremental sales, but if the tripwire price range in Chicago between $5.28 and $5.14 is broken to the downside, it will open the technical door to considerably lower prices.   

Stay tuned.

MarketBullets® Friday Dec 6, 2024: Pre-Dawn 

     Only minor changes, if any, to the balance sheet for wheat expected in next Tuesday’s World Ag Supply/Demand Estimates, to be released at 9:00 AM Pacific, 11:00 Central.

     A 10-cent up-day has become a rare bird, with a steady 45 degree up-angle all day Thursday. The market has once again acknowledged the flat sideways low side of the recent range with a bounce.  

     U.S. winter wheat has entered the dormancy season in better-than-expected shape.   

     Stats Canada report on December 5th showed the country’s wheat production this year totaling 34.958 million metric tonnes, below the pre-report average guess of 35.04 million, but above last year’s 32.946 million tonnes, or about +6.1%. Spring wheat, the dominant class by far was reported above the expected total 26.07 million tonnes. Canadian canola output is seen at 18.51 MMT, below 19.19 million tonnes last year.

     Russian winter crops are showing 37% in poor condition or not emerged versus only 4% a year ago. The share of winter crops in good condition was about 31%, compared with 74% last year and the lowest in over 20 years. 

     In the wake of a sharp surge in Ruble value over the last six trading sessions, Elvira Nabiullina, the governor of the Central Bank of Russia, confirmed that the institution was seriously considering raising the key interest rate again, despite it already being at 21%.    

     Australian wheat exporters are showing aggressive performance with the highest level of wheat exports for October in four years, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). Argentina and Australia are both competitors for the Pacific Rim markets most valued to U.S. wheat exporters. Both are expecting decent-sized crops as harvest advances in the southern hemisphere.

     Heavy rains over the past two weeks in Australian wheat country is causing quality problems. Some 2.5 to 5 million metric tonnes of wheat in the southeastern growing regions has already been downgraded to feed from milling quality according to observers, about 8% to 16% of the projected large crop. 

     Friday morning’s wheat trade was hanging on to Thursday’s gains, which actually began at about 8:30 AM on Wednesday just after hitting a life-of-contract low at $5.40 in the March futures contract. Thursday’s session was all upward and ended about 20 cents above Wednesday’s low. As of very early hours on Friday, the week-to-date net is a plus 11 cents. Paris was indicating an opening trade at a nominal call of +€3.00 per metric tonne (about +$.09 per bushel).

     The trend is still very tentative, since one nice up-day bouncing off of a new long-term low does not make a change in direction, but it does take some of the pressure off. We still are waiting for a more definite confirmation of a heading, maintaining trigger prices as before (see previous updates for specifics).

Stay tuned…there is always more.    

MarketBullets® Thursday Dec 5, 2024: Pre-Dawn

     The narrow, sideways wheat price range over the last 5 sessions is similar to the period between the Last Week (LW) of October and the First Half (FH) of November. That period was followed by a breakout to the downside that carried Chicago wheat futures to a 30+ cent decline and a test of the LW August lows. At some point this market will awaken, but it snoozes right now. The funds are short-sold, but without a spark of some news, will likely continue to add slowly to net short-sold positions.

     It is easy to become complacent in such dull market conditions.  It is relatively easy also to keep up with recent developments, or the lack thereof. Stay with us, as we will see and alert to changes.

     Recent European Commission data reports Marketing year-to-date soft wheat exports at 9.48 million metric tonnes versus 13.75 million tonnes for the same period last year. This is not a surprise factoid, but merely reinforces the gloomy fact that such a dramatic decline is not enough to fire up the buyers much.

     Cargill has announced plans to lay off about 5% of its 164,000 global workforce as declining crop prices have drained margins and hurt earnings and revenue.

     Stats Canada will release wheat production data on Thursday that is expected to show a healthy 35.04 million metric tonnes this year versus 32.95 million tonnes. Spring wheat is guessed to be 25.98 million tonnes of the total.

     From recent Reuters:  The proportion of winter crops in Russia from the 2025 harvest in poor condition or have not sprouted is over 37%. Apparently just 31% of the winter wheat crop in good condition versus 74% last year.

     The trend is sideways with a negative tone, but no conviction. Best to stay on plan, but if the wheat price stays inside of the recent range, we will hide and watch for a moment. No sleeping on watch!

Stay tuned.

MarketBullets® Wednesday Dec 4, 2024: Pre-Dawn

      The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) reports the country will likely produce about 500,000 tons less barley and 100,000 tons more canola than it thought three months ago. "Higher production in New South Wales, Queensland and Western Australia is expected to mostly offset reduced production and crop losses in large parts of south-eastern Australia caused by persistent dryness and widespread severe frosts.”

     On December 3, 2024. James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture, wrote, “Farmer sentiment jumped again in November as the Purdue University-CME Group Ag Economy Barometer climbed 30 points to 145. Both the Current Conditions and Future Expectations indices increased in November, with the biggest improvement taking place in future expectations. The Future Expectations Index increased 37 points to 161, while the Current Conditions Index rose to 113, 18 points above October's reading. November's sentiment improvement pushed the barometer to its highest level since May 2021, with expectations for the future also reaching their highest level since April 2021. Some of the reasons behind the improvement in farmer sentiment include expectations for a future regulatory and tax environment for the agricultural sector that is more favorable than expected prior to the November elections.    

     The effect on Farmer sentiment could be price positive if it causes producers to hold wheat off the market longer than they might have. In any case it is intuitively a better tone than the alternative; grumpy pessimistic farmers pinching pennies and not laughing at jokes.

     Argentina's wheat harvest is reported 38.7% complete.  Buenos Aires Grains Exchange (BAGE) has released an estimated production of 18.6 million metric tonnes. USDA has posted 17.5 million for Argentina this season.  

     Global economic uncertainty is on the rise, with Trump’s opening rounds already rousing China to reply with commodity (metals) tariffs of its own. Its probably a good idea to bear in mind that all of this is talk at the moment, and that Trump’s negotiation style is big threats followed by workouts and smaller threats. Uncertainty is usually a market-price-negative in general. What are usually background factors are going to be up front for a little while, as wheat fundamentals are not likely to change much until well into the new year. Watching things like crude oil, copper, interest rates, gold and currency relationships (Rubles per Yuan, or Yuan per Dollar) may yield a gauge of global economic health that can be applied to wheat price trends.

     For now, there is not much of a trend in wheat, as seen in Chicago, Paris, Minneapolis and Kansas City contracts. The setup is not hard to read, so monitoring the price range boundaries is likely the best tool.

     Next crop production and WASDE report on Tuesday, December 10, 9:00 AM Pacific Time / 11:00 AM Central.

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday Dec 3, 2024: Pre-Dawn

     Russia has tapped the brakes on wheat exports as expected. Russian wheat export quotas are set on sales totals by individual export companies based on their historical market share. This being well-anticipated by the trade, may not be enough to ignite a rally by itself, but it does provide a positive background. Their opening shot is to make the Feb-June total 11 million metric tonnes, versus 29 million tonnes last year.

     The market is looking for a short-covering excuse. Year-end portfolio adjustments among the big trading funds will shift some money around. Easing of the U.S. dollar and healthy U.S. export numbers compared to last year? How about a just plain “technical correction” without any particular reason? Chicago can do 25 cents up without sending out invitations. The recent high at $5.77 in the March Chicago futures is the target. We already know the lower edge. 

     We will be watching Paris Milling Wheat futures for a clue.

     Stay on plan. Its OK to hide and watch since we have marked the hard edges of the price range and have orders ready (or even placed in advance).

Stay tuned. Every day. All the time.   

PS - Illinois produces the most soybeans of any state. If you are in love with the Illinois farmer’s daughter, does that mean you have a soybean crush?

MarketBullets® Monday Dec 2, 2024: Pre-Dawn

     KC Hard Red Winter (HRW) has posted a new low. Minneapolis Hard Red Spring (HRS) futures have not hit such a low, trading early hours of Monday, Dec 2 about 19 cents above the August 26 seasonal low of $5.63, nor has Chicago, trading 30 cents over its summer low, and 15 cents over the more recent Nov 15 dip to $5.28. All these price points represent significant trigger points if they are breached. The Trend is flat to lower. The charts are ugly, and the market is seeking any kind of fundamental push.

     As we approach the calendar year end, there is a certain amount of position adjustment to be expected among the large speculative trading funds within the next few weeks. They have been rebuilding their net short-sold positions since early October and have now reached about the same net short position as they held in August when the seasonal lows were identified. The subsequent buyback was a significant part of the reason for the 85-cent rally into early October. There is no presently tangible trigger for a similar rally, although Russian attacks on civilian vessels in the Black Sea, notably in the territorial waters of NATO-member Romania in September, played a central role, along with some weather-related issues for Russian wheat.

     It seems probable that the same type of stimulus will re-occur at some point, On the other hand, if there is a cease-fire in Ukraine, we will all breathe a sigh of relief for the folks whose      lives are at stake, including the hapless young North Korean soldiers sent into a meat-grinder war far from home, BUT there is a wheat marketing problem; the global wheat market will also be relieved, and likely to relax prices as war-premiums are unwound, a serious potential negative factor.    

     The market has built a fair amount of base pattern since late September, with a sideways range and several tests of the lows forming a flat warning line that can be useful as a support line, complete with clustered standing-sell-stop orders at or just below the level of the range lows. For a trader, there is very little meat on the bone here. For marketers, there is a test of patience, but also a period where the only kind of cash sale is incremental on schedule. If the price penetrates the low side, there will likely be a burst of selling that will carry it lower still, the kind of thing that makes earlier crappy sales look better later. Holding on to stored, unpriced wheat is still not the best strategy. It’s expensive and risky and has worked in the past just enough that we can only remember the times it was successful.             

     What we will do here at MarketBullets., LLC, is to grudgingly let go of slender slices of old and new crop wheat each month, hoping to see a price bounce large enough to take the pressure off. We will use the recent lows as warning lines.

Stay tuned.  

MarketBullets® Wednesday Nov 27, 2024: Close

     Friday is First Notice Day (FND) for December wheat futures, the first day that intent to deliver actual physical wheat may be filed by any holder of a short-sold contract that has not been previously offset. Even after receiving notice, these contracts can still be traded (offset by buying a futures contract and washing out the position) until the last trading day (LTD) of the December 2024 contract at mid-month (before FND is much to be preferred). It is the short-sold contract holder that determines delivery timing and location (limited by exchange rules) during the delivery period of the first half of any futures expiration month.

     The process of tying a futures contract to physical delivery involves formal notices and invoices, can be expensive and is quite easy to avoid by offsetting the contract before FND. The only ones for which it is practical for futures contracts to be delivered or received are the companies that extensively use the “designated delivery points”; elevators certified and specified by the exchange.

     Futures contracts end up being real cash contracts at the end of the life of every deliverable trading month. The vast majority of contracts traded in each designated month are offset long before making or taking delivery becomes necessary.

     The old trader’s story about the private person who traded wheat contracts and was not paying attention, heard the doorbell ring and opened the door to find a truck driver in the driveway asking, “OK, where do you want me to put this wheat?” is amusing, but not real. There is a system that makes that story really impossible. A phone call, an invoice for full contract value (5,000) bushels) and an elevator lift charge, among other fees, would have to be paid and completed first. No fear of delivery, but if you do not want your broker’s back-office staff and others very frustrated with you, please offset early!

     The Chicago wheat contract slid into Wednesday’s close with a loss of 9½ cents. At $5.94½, it is resting just on top of the previous low close at $5.42. The pattern is ugly in the eyes of marketers of wheat. A test of the August lows is imminent. If the futures price declines below that low on a closing basis, there is likely to be a bit of panic selling, or at least it will trigger larger trading fund short-selling. A break like this is an opportunity to sell a bit of wheat, as bitter as that may seem to be. Reducing risk exposure in a confirmed negative trend is smarter than it may feel. The confirmation is not in-hand, but hold and watch for the whites of their eyes, boys.

     The market needs a fundamental reason to buy, but that is not visible at present.

This stuff is trackable. Let’s track it!  

PS - The Russian Ruble continues to unwind, now at long-term high territory. See Previous comments for more detail.     

MarketBullets® Wednesday Nov 27, 2024: Pre-Dawn

     The Ruble continues to unravel versus the Dollar Index and the Chinese Yuan. The impact of this trend on the Russian war-time economy is slowly eroding their ability to operate, potentially pushing Putin into an economic corner. How he will react is not easily drawn, but the pressure is rising. For wheat the short-term is less expensive Russian wheat, even as the much-discussed export quotas and higher export taxes are applied. Intuition says this is possibly a net price-positive factor.

     The U.S. Dollar is very strong, based on healthy economic numbers, a completed election, and steady interest rates. With core inflation improving and a stable economy, the “real” interest rate for the greenback is a positive number greater than most competing currencies, causing capital flow into the dollar. This factor is a mild net price-negative.

     It is good to see some movement to turn the heat down on the Israeli/Hezbollah war. The impact on the markets is psychological, but none-the-less positive. Even as this is in the works, Jordan is buying wheat, some from Cargill if the reports are right. For the overall wheat market, this is another psychological boost, even if it is not being originated from the U.S. Net price positive.

     The wheat price charts show a narrow range. The entire range of Monday and Tuesday’s trade has been within last Friday’s range.

     The Pre-Dawn trade in Chicago shows March futures trading a dime above the lows from November 25 ($5.36), which is about 16 cents above the seasonal lows of November 14 at $5.20. These are the warning lines, below which there is plenty of room for wheat price declines. A failure to hold above these lines suggests a new set of downward steps. If you have wheat on the table to be sold, holding it is reasonable here, but if the warning lines are tripped, better let go. What we really want to see is a move above $5.58. That would form a new pattern with some upward potential. Until then, the market is slowing down as we move into the holiday season.

     It remains that the market environment is risky, with factors that could explode easily, so we must observe and note the tone and volatility even as we eat holiday meals.

Stay tuned. The next year is going to be “interesting”.

MarketBullets® Tuesday Nov 26, 2024: AM

     The Russian Ruble is clearly getting weaker, as it is approaching the value levels seen in February and March of 2022, coinciding with the invasion of Ukraine. It is not just the U.S. Dollar, but also visible in the Ruble/Yuan. The impacts of this trend are many, including pressure on the Central Bank of Russia (CBR) to raise interest rates, but the easily identified effects are to make Russian wheat and oil less expensive, and to make war expenses to Russia greater. This trend seems likely to play a key role in any decisions about negotiating an end to war in Ukraine.    

Winter wheat crop condition as of November 24:

     WA 48% Good to Excellent (GEx) -5% Versus 53% Last Week (LW)

     OR 54% GEx -6% VS 60% LW – ID 47% GEx Unch from LW

     National: 55% GEx +6% from LW, mostly gains in TX, OK, KS hard red winter states.

     Wheat crop condition reports are coming to a seasonal end and will resume in April.

     As the wheat market approaches the long Thanksgiving weekend (with limited Friday attention), the price charts show another bounce off of the sensitive price zone that has discovered buyer interest repeatedly. This pattern is intrinsically positive, especially since it has produced a small “higher high” which is an important setup for a positive pattern.

     The market still has no price positive aspects, including better crop conditions in major crop areas heading into dormancy season in the northern hemisphere.

     We are in a technically driven period which may end up being highly dependant on trading funds for momentum, tricky business at best. This is where a trading plan, perhaps with some form of optimization for such occasions. Never fear, the charts are here! We hide and watch.

Stay on the track, tuned in, turned on and far out!  

MarketBullets® Monday Nov 2251, 2024: Pre-Dawn

     Chicago wheat futures in the wee hours of Monday, November 25, 2024 were down 7¾. Now we head into a short week, with Thanksgiving on Thursday and rookies at the desk on Friday while the boss takes a well-deserved break. The wheat market is approaching another test of the previous lows. December will have its First Notice Day on Friday and go into its delivery period  for the first couple of weeks of December. March is the lead contract on the charts now, as the trade has mostly already rolled out of December into deferred months.

     Paris Milling Wheat closed Friday with a very narrow trading range and was trading 3-4 Eurodollars lower Monday morning.

     The big wheat futures contracts are all in a trading range. If Chicago futures fail to hold above $5.28 Dec ($5.46 March) in the next couple of sessions, we will go into a long weekend with no momentum. The wires will be pre-occupied with Trump’s cabinet picks unless war intrudes on that sacred ritual. Meanwhile the price of wheat is trending lower.

     Stay in harmony with the trend. Stay on plan. This market has very little energy.

It’s trackable, even when it’s boring.  

MarketBullets® Thursday Nov 21, 2024: PM

It is inevitable that anyone interested in the long-term price of wheat must maintain awareness of the activity of the largest wheat exporter in the world, as well as the impact of its close neighbor, the Ukraine. Ukraine has slipped to number 6 in the rankings, but there is no doubt in the future those fertile hectares will be active. The decisions of the leadership in those two nations will have direct impacts on the global price of wheat going forward.

We asked ChatGPT about the consequences of the use of nuclear force in Ukraine by Russia. The following summary is at least the basics of what Putin has to consider before he pushes any buttons:

“The use of nuclear force by Russia in Ukraine would lead to significant global and regional consequences, including:

Global Consequences:

1. Escalation of Conflict: A nuclear strike would likely provoke a severe military response from NATO and other nations, escalating the conflict into a broader war.

2. Humanitarian Catastrophe: The immediate impact would be catastrophic, with large-scale loss of life and long-term health repercussions due to radiation exposure.

3. Global Isolation: Russia would face unprecedented isolation from the international community, including harsher sanctions and diplomatic repercussions.

4. Nuclear Proliferation Concerns: The use of nuclear weapons could lead other nations to reconsider their nuclear policies, potentially accelerating arms races or encouraging proliferation.

5. Economic Repercussions: The global economy would face a significant downturn due to uncertainty, disruption of trade, and potential energy crises.

6. Human Rights Violations: Any nuclear attack would lead to serious violations of international humanitarian law, drawing widespread condemnation.

Regional Consequences:

1. Immediate Regional Chaos: Neighbors of Ukraine, particularly NATO countries, may increase their military readiness or intervene more directly in the conflict.

2. Refugee Crisis: A nuclear event could trigger mass displacement, leading to a significant refugee crisis across Europe and beyond.

3. Security Dilemmas: Countries in Eastern Europe may feel threatened and may seek to enhance their own military capabilities, leading to further regional militarization.

4. Geopolitical Shifts: Alliances may shift as nations reassess their security posture in light of Russia's nuclear capabilities, potentially strengthening NATO's resolve and presence in Eastern Europe.

5. Regional Stability: The use of nuclear weapons could destabilize the existing order in Eastern Europe, encouraging nationalism and potentially leading to conflicts in other areas.”

     The market is telling us that the war in Ukraine has increased in intensity, but the impact on wheat business is not dramatic so far. The increase seems mostly due to anticipation of a global attempt at ending the invasion of Ukraine via negotiations.

     So, Yes, If Vladimir, sensing an abyss yawning before him, has a tantrum and decides to nuke-out and tip over the game-board the price of wheat could go straight up, but its probably a bad bet. It’s hard to imagine that the old KGB guy doesn’t have an escape plan, and he definitely hasn’t lost yet.

     Word on the street is that Russian farmers may be allocating fewer hectares* to be planted to wheat due to low prices. This is undoubtedly happening in more areas than the Volga Valley. The big wheat wheel turns…

The Russian Ruble is reaching its weakest dollar value in global trade since February-March 2024, the time of the initial invasion into Ukraine and the weakest Ruble exchange rate on available data. In terms of the Chinese Yuan, the Ruble is also weakening, as it nears its all-time lows. Obviously this is a troubling development that is likely to make war-time budgeting difficult for Mr. Putin, but it does make his wheat less expensive to his customers. Meanwhile, the U.S. Dollar Index has pushed into new 2-year highs dating back to November 2022. (The Dollar Index does not include the Chinese currency or the Ruble in its composition).

     The micro-trend in wheat prices is four days up and one day down since last Thursday the 14th for a 19-cent gain. Very early morning trade on Friday was down 2½ cents in Chicago and Minneapolis, and -1¼ in KC. The larger, 36-session channel is negative, with a pattern of lower highs and lower lows uninterrupted since the first week of October. The lowest that move has reached is $5.28 in Chicago, 8 cents above the August low, a failure of which would be the breaching the fence into lower price territory.  

Chicago wheat contracts have achieved the nominal downside target of the large, negative “head and shoulders” pattern that began on a rally following the August long-term lows. This is not a signal, but it does suggest the opening of a new phase.

Paris Milling Wheat futures are more positive over the last 5 trading sessions that we have seen since the last half of September. This contract is useful as a gauge of Black Sea regional wheat values. Given the weather struggles that the European Union’s largest wheat producing member has seen, with massively reduced exports, the price should have been more positive earlier but for Russia’s aggressive sales program. Now, with (Russian originated) rumbles of Russian export quotas and higher taxes, Paris wheat futures may be in a sort of price bird-dog role. At least it is an indictor that we should not ignore.

     The market is still working on a low-end base, with increasing war-volatility. There is no mandate to hold back on planned incremental sales. The fundamentals remain unfriendly. Opportunistic sales on schedule make sense. There is still a respectable carrying charge built into the red wheat contracts. The PNW white wheat market reflects higher deferred prices versus nearby. IF Chicago catches a rally, Soft White seems likely to respond willingly. That’s IF.

Stay tuned. There is always more.     

*1 hectare = 2.4715 acres

MarketBullets® Thursday Nov 21, 2024: Pre-Dawn

     Click <here> to read the opening chapter of “The Problem” about why it is so hard for producers to let go of stored wheat, and other things to ponder about ways to approach the wheat market.    

     Wednesday night into Thursday morning trade was mildly positive on what begins to feel like holiday attitude trading. In the absence of motivational changes in the news and data flow, many are focusing on further geopolitical educational efforts and technical chart applications. The short-term wheat price pattern is nearing the long-familiar region of price sensitivity established beginning in July of 2024. The behavior of the wheat price will be observed closely in the $5.60 to $5.80 range. A break to the upside out of this well-trodden range would require news developments we do not have today, and attract additional buying. The downside tripwire range is $5.20 to $5.28, a failure of which would be a major break. The marketing decisions resulting from this technical picture are all still in the light of a very large and long-term downward bias. Steady as she goes, Cap’n.

     The Russian response to the Ukrainian use of U.S. and U.K. origin missiles to strike deeper into Russian territory has been muted, even with statements of nuclear threats. The calculus of whether the Russians are likely to use tactical nuclear force is complex, with Chinese and other Russian allies measuring potential impacts on their own their geo-economic status. This seems unlikely unless Vladimir has a temper tantrum, which would be uncharacteristic of the chess player.

     The wheat market is healthy, if boring. The next week or two seems likely to produce a backing off and retest of the recent lows, but that is a “Speculation”.

Stay tuned. It’s trackable.        

MarketBullets® Wednesday Nov 20, 2024: Pre-Dawn

     Wheat has honored the technical lows as defined by retracement and previous support zones, thereby avoiding a treacherous trap door into the unknown (price zones that have not traded since the summer of 2020, well before the Russian invasion (Feb of ’22). The long-term perspective for wheat is that the current price is actually the higher side of a range that has been tested repeatedly over the last decade, under all manner of conditions. The downside risk, which is always with us, is substantially smaller than it has been for 4 years. Costs of production have risen for every wheat producer in the world, altering the forward planting decisions for wheat acreage in many regions. This is a very vague and slow-moving indicator that remains in the background, but with global stocks of wheat supplies already at historically reduced levels, it makes any continental-sized weather, political upheaval or financial stress event much more compelling; a difficult-to-measure risk increase that is net  price positive.

     The present, short-term market has no mandate except to move wheat when, where, and as-needed, a demand-driven environment that does not provide concentrated motivations for up-trends like a weather market can. This seems likely to last into the new year, making marketing of physical wheat largely a calculator and chart driven affair.

     The trendline for wheat is stretching out sideways with a very slight upward bias, trading in a range $1.50 or so in breadth. The last time with this general pattern was the 4-year period between 2016 and 2020. Notably this coincided with a regular political cycle in the U.S. that was remarkable in many ways. This co-incidence is not enough to use as a prediction. In fact that would make a much too slender reed upon which to trade one’s livelihood. It is mentioned here only as a side-note.

     The global wheat crop-condition looking forward is good, with a  few weak spots. There are still lots of hungry folk that will buy wheat, and the world is still stable enough to sell and ship it to them. Any weather deviation from the norm may create a tradeable upward price move, but there is no indication that this is likely as the northern hemisphere moves into dormancy and the southern producers get into harvest.

     The marketing environment for wheat producers is demanding an opportunistic and attentive posture to sales. For the moment it is a buyer’s market. A thoughtful and deliberate marketing plan is likely to yield a significant advantage over the bin-as-a-checkbook style this crop year.

Stay tuned here. We will see the big changes emerge clearly on the charts.

MarketBullets® Tuesday Nov 19, 2024: Pre-Dawn

     Accumulated U.S. wheat export sales to date in the current crop year have totaled 9.84 million metric tonnes, 35% ahead of the same period in last year.

     PNW winter wheat crop condition as of Nov 17: WA 53% Good-to-Excellent vs 54% Last Week, OR 60% GEx vs 67% LW, ID 47% GEx vs 40%42% LW.

     The “Double-Digit-Poor-Condition” Club for as of Nov 17 included CO at 10% (a 2% improvement, NE at 20% (a 7% increase in poor condition acres, all coming out of last week’s “Good” category), OK at 15% (a 2% improvement), SD at 27% (1% worse), and TX at 14% (5% better than last week – also dropping from 15% “Very Poor” to 8% this week). Kansas dropped out of the club to 9% this week from 10%. What a difference a little moisture makes!  All of the above are HRW states, and the net is better condition.

     National winter wheat condition for 18 states is 49% Good-To-Excellent, a 5% overall improvement.

     The dominant headlines are set to be Russian response to missile rules being relaxed for Ukrainian attacks into Russia, “Trumps Picks” for cabinet positions, and retail activity levels in the fourth quarter. Also, why is Dallas having such a melt-down? The eye-rolling and appeals to the sky were at maximum on Monday night…

     Russia, although talking a great story about export quotas about to hit, is not one to leave wheat money on the table. They will milk the concept of limited sales as long as possible before applying the brakes on sales. Lets not get too bullish on that one idea.

     The wheat futures chart shows trading perilously close to long-term lows, but an attempt to rally, mostly on short-covering. With country movement slow and Russian wheat entering dormancy under poor conditions, there is still a slight haze of friendly uncertainty. In the macro-background the statistics of global supply are still showing lower levels than recent years. These are not compelling price movers in the short term. The drivers of this market are mostly technical and short-term in nature, and it is unlikely that will change before the first of the new year.

     The wheat price trend is not positive. There is no buy signal flashing, but the downside pressure is lower than it was just a couple of weeks ago. A marketer could justify patience here, but if the price drops below those lows, e.g. below $5.28 to $5.20 in Chicago December futures (or $5.46 to $5.42 in March), there is bound to be some selling energy released. How much of that emerges depends on when and how the barriers are broken. The market is well below the Box-o-Rox 60-day moving average, so that indicator says, “no delays on planned incremental sales”.

Stay tuned.

MarketBullets® Friday Nov 15, 2024: Weekly Close

     Paris Milling Wheat reached the 78.6% downside retracement of the downward move that began in early October and showed a healthy bounce on Friday. Even with very low production and export figures, French (and European Union) wheat prices have been dominated by Black Sea export prices.

     The wheat complex is in the process of testing its seasonal lows, reached in late August, with Chicago Soft Red Winter (SRW) ending the week at $5.36½ in December contracts, versus the last week of August at $5.20¾. KC Hard Red Winter (HRW) is also within a nickel of its August low of $5.27¼, while Minneapolis Hard Red Spring (HRS) touched within 3 cents of its summer low.

     The big spec funds added to their net short-sold positions over the last 10 days in both Chicago and KC. They may try to press this market lower to “run the stops” that cluster around significant previous lows, but fundamental reasons to go lower have been substantially addressed, at least for the moment, making the current test of the lows even more useful as a trend gauge.

     The next couple of months will be focused on Russia’s export management efforts, with potential quotas and taxes drastically reducing their pace of sales and shipments. This will push some of the demand back toward the U.S. and especially the southern hemisphere, where Argentina and Australia will be bringing significant export supplies to the window. If there is a time-range for improvement of wheat prices it seems likely to show up between now and the first couple of months of the new year.  U.S. harvest is now about 5½ months from early movement, while Argentina is about to start cutting in 2-3 weeks, and Australia has already begun in some regions and will continue until February.

     The week just ended seemed like a “blow-off”. Friday’s little rally felt like an adjustment as a recognition of a low. This is all just intuition, which is a notoriously poor way to make trading or marketing decisions, but expressing this kind of attitude is part of the process of centering a marketing sales plan decision so it sticks. More confirmation is needed to confirm a turning point here, but the first step is completed. Now we hide and watch for a minute.

  This stuff is certainly trackable. Let’s track it!

PS = Not every price increase is due to “inflation”. The underlying cause of inflation is excessive amounts of dollars in circulation, principally created by the issuance of debt instruments.

MarketBullets® Friday Nov 15, 2024: Pre-Dawn

     Government debt has risen by half a trillion dollars in the last few weeks.

     The interest on that debt will reach $1 trillion per fiscal year sometime in the next 18 months. <CBO Outlook Feb, 2024>

     In Dec 2023, the annualized cost of servicing the debt was 14% of total federal spending. 

     The Dollar Index is rising because interest rates are rising, making debt service more expensive and anything exported from the U.S. less competitive.

      Recent years of the U.S. national debt:

• 2024: As of November 2024, the U.S. national debt was $35.46 trillion. 

• 2023: The U.S. national debt was $33.16 trillion. 

• 2022: The U.S. national debt was $30.92 trillion. 

• 2021: The U.S. national debt was $28.42 trillion. 

• 2020: The U.S. national debt was $26.94 trillion. 

• 2019: The U.S. national debt was $22.71 trillion.

     None of the above is insurmountable, but it will have a major effect on policy.

     The wheat price is responding to a supply/demand balance that reflects an operational global surplus of wheat available, even as global statistics imply tightness. As the wheat price levels off from recent declines, the movement of cash wheat will be much slower. We are back at the seasonal lows. A failure of those lows to hold prices up will open the door to much lower price targets, but as the price reaches to or below the cost of production, the market will adjust.

     The trendline is negative, but the rate of descent is slowing. It is still best to stay on planned incremental sales, including new crop. The cost of storage is going up, and there is still downside risk. There are still good marketing tools that can help add to sales revenue if used appropriately. Call your merchant.

     Stay tuned, stay awake, stay on plan.

MarketBullets® Thursday Nov 14, 2024: Pre-Dawn

     As of the small hours of Thursday’s trade, the U.S. Dollar Index is up 6.93% from Oct 1 to Nov 14, now at its strongest since November of 2022. Although this has been in the news, the relationship between nearby wheat prices and the actual Dollar Index is not extremely tight. A change like the one that has occurred since October is significant, but the competitor currencies, .i.e. Canadian, Argentine and Australian, are not well represented in the traditional Dollar Index (see annotations on chart for index composition). There are other factors that are playing a larger part in the wheat price breakdown over the last 4 sessions, during which Chicago has dropped 33 cents from last Friday’s close. KC has slipped 25 cents and Minneapolis is off 27 as of the close on Wednesday November 13. Paris Milling Wheat lost the equivalent of 20 cents.

Thursday’s very early trade in Chicago is quietly down about 2-3 cents, as it is also in KC. Minneapolis is up 1-2 cents.

     Most of the softness in wheat prices can be traced to a lack of global buyer interest and some significant technical chart pattern breaks that have stimulated the funds to add to their short-sold positions.

Global news is mixed.

     There is talk that Russia is on the threshold of imposing significantly smaller export quotas in the face of a declining crop size, surging current exports and a weak Ruble. This is probably the most likely idea to slow the decline or prop up the wheat price, which has reached very near some lower technical objectives that have been in development for many weeks. There is no indication of this yet, but it bears watching.  

     FranceAgriMer continues to cut forecasts for total wheat exports, now 9.89 million metric tonnes versus the previous, already drastically cut, 10.03 million tonnes, a 40% drop from the 16.6 million tonnes exported last year.

     Russia’s 2025/26 wheat crop acreage is expected to drop to the smallest since 2018/19 at 15.4 million hectares (38.1 million acres) according to Rusagrotrans, a Russian railway infrastructure operator for transportation of agricultural and mineral raw material bulk cargoes by special-purpose hopper cars.

     Argentina’s wheat crop estimate from the Rosario Grain Exchange has been revised to 18.8 million metric tonnes, a 0.7 MMT (3.6%) decrease from the previous estimate.

     The wheat price trend is still lower, until its not. Since we are marketers and not traders, our interest is in identifying and confirming actual changes in price direction, which takes time and always seems to task the patience.

     The stuff is trackable, though, so let's track it!

PS – The honeymoon for the new presidential administration seems to be eroding quickly. It is sure to generate some anxiety, and markets in general do not respond well to uncertainty. Volatility is virtually certain to rise, so stay cool, stay calm, and stay safe out there!

MarketBullets® Wednesday Nov 13, 2024: Pre-Dawn

     Tuesday saw a confirmed wheat market break out below the neckline of the head and shoulders pattern on the daily December futures chart for Chicago Soft Red Winter (SRW) wheat. This line had been tested and re-tested over the period since October 28. Now it is difficult to claim any existing short-term uptrend. The last defensive hope of the entire post-August upward price effort is the single seasonal low at $5.20 on the December contract chart, about 26 cents below the trading level just before midnight on Wednesday, November 12. The nominal (thumbnail-estimated) downside target of the head and shoulders pattern is between $5.25 and $5.35.

     Since we do not attempt to call actual trading signals, these ideas are intended only to illustrate ways in which to identify a trend. In this case, if there had been any hesitation to adhere to a planned incremental sales program, now the support for the idea of an uptrend is absent.

     Box-o-Rox rules released the brakes on planned sales on Nov 11. This is not a trading signal, but an indicator that the value of holding back intended incremental sales of cash wheat is poor.

     The market is adjusting to improving crop condition in the U.S., Moisture in the Russian wheat region forecast and a stronger U.S. Dollar. All of this is known to the market, but getting competitively priced wheat into the hands of end-users is requiring lower prices.

     PNW winter wheat condition has improved with WA at 54% Good-Excellent, versus 51% Last Week, OR 67% vs 63% LW, and ID at 42% vs 43% LW. National winter wheat gained 3% to 44% Good-Excellent for the week ending Nov 10.

     Longer-term, there are potentials for a supply squeeze. Russia has experienced a drought that has slowed new-crop seeding. Rainfall in many parts of the (very wide) district was at 20-year low in the five weeks to October 6. If this condition continues into the late winter-early spring, say January-March 2025, the size of the market adjustment to global provisions of wheat will be noticeably positive. This is probably the largest potential upward factor, other than a failure to see moisture to finish making the crop in the Hard Red Winter states.

     The chart is pointing lower. The U.S. crop is established and growing. We all know that the northern hemisphere crop is really made in late winter/early spring. For a rally of significance, we will require a bigger and better set of motivating factors with which to push the buyers into action.    

This stuff is trackable. There is always a chance. Let’s track it!

MarketBullets® Tuesday, Nov 12, 2024:  Pre-Dawn

     Monday’s quasi-holiday did produce some interesting trade, as by about 8:00 AM Pacific Standard Time Chicago was down 20 cents, but very soon after that hour, the Dec started to claw back up and managed to close “only” 7¾ lower for the day, well above the challenge lows that make up the lower range boundary that has been so reliable for the last 11 trading sessions. Normally that kind of volatility and a “toe-dipping” behavior in futures would be a suggestion of a stronger pattern ahead, but since Monday was not really a regular business day it has to be scored as suspect.

     There are very few reasons to motivate the big money to move into the long-bought side of wheat. That group has added to their long-bought corn and just a tid of wheat, but no drama. The world is still shaking off the stress of the U.S. election as everyone tries to get a handle on what to expect next. It’s a kind of honeymoon that may not last too long, but for now it seems there are country leaders waiting to see what’s next.

     The condition of the wheat crop in HRW country has improved a few points, but it is still a long way to the bin from here. The crop size could grow quite a bit with the right weather.

     The wheat complex, including Paris, Russia and U.S. exchanges waits for a sign. For the moment, the range lows look like a hay rake along the bottom line, a hint that there are some buyers hanging around.

Early trading Tuesday was near unch’d, still honoring the support line. Let’s just hide and watch for the moment. Things could change in a quick hurry, shure, shure, yah you bet!

Stay on this frequency for updates.   

MarketBullets® Monday Nov 11, 2024: Pre-Dawn

      Veteran’s Day – No banks, no bonds, just grains and stocks

     Veterans Day, Monday November 11, is a federal holiday that was created 106 years ago.

     On Nov. 11, 1918, the official end of World War I, an armistice between the Allied nations and Germany began on the 11th hour of the 11th day of the 11th month.

     The day is intended to be a "celebration to honor America's veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good,"

     116,515 American soldiers died in World War I. As of today, including those honored on that first Veteran’s Day, officially over 733,000 American military personnel have died in war…about the same as the entire population of Denver.

     Here is to thinking about those men and women; about why and what they and their families sacrificed for us, and how perhaps we might recognize the personal value of that costly gift to each of us.     

     The wheat market is open Monday. These odd, half-holiday markets can be strange and volatile. Early trade Monday morning has Chicago pressing hard on the chart price lines that we have designated “support”. A close below that line at about $5.57 in the December contract will be noticed by the trade and treated as a trigger by some of the funds.

     If you have been waiting for a signal, this one is only slightly suspect due to the holiday, but the trading computers don’t know or care about that. We will be treating a break downward as a re-establishment of a negative trendline. Confirmation will come a few days later.

Stay tuned.

MarketBullets® Friday Nov 8, 2024: Post-WASDE Market Close

     WASDE: “The outlook for 2024/25 U.S. wheat this month is for slightly larger supplies, domestic use, and ending stocks but unchanged exports.”

     “The global wheat outlook for 2024/25 is for larger supplies and consumption, reduced trade, and slightly lower stocks.”          https://www.usda.gov/oce/commodity/wasde/wasde1124.pdf

     Wheat spreads are shifting toward premium Chicago over KC and lower carrying charges in Chicago forward markets. The implications of the changes are counter-intuitive (see notes under “Spreads” charts.

     The Chicago wheat chart shows a very flat range that is now 10 sessions old. The wheat complex, including Paris Milling Wheat, is without a mandate. The WASDE on Friday morning produced no trading edge, leaving the market flat. When the development of factors with enough power to move prices emerges, it will break the price out of the sideways range. Meanwhile, it seems prudent to hold until that obvious shift becomes visible.

     This is a trackable animal. Let’s track it!       

MarketBullets® Friday November 8, 2024: Pre-Dawn

     Export sales for the week ended Nov 1 were 20% below the 4-week average. As of week 22 (42.3%) of the marketing year, the sales total to date is 13.9 million metric tonnes, 61.8% of the current USDA target for the year of 22.5 million tonnes, which will be revised as of the the World Ag Supply/Demand Estimates (WASDE) to be released this morning at 9:00 AM PST / 11:00 Central. Fresh weekly export sales will also be released Friday morning.

     Corn is selling well, as we are in the period before Southern hemisphere supplies hit the market and ethanol feed stock demand is strong. Corn charts are in a well-defined upward trending pattern that started from August 26 lows, now 41 cents below today’s trading. The pricing health of the sister grain for wheat is a positive background factor. Soybeans are also in a mild positive slope, less convincing than corn.

     Moisture, that money that falls from the sky, is improving across a wide proportion of U.S. wheat production zones. Russia is still waiting for rain, which may end up being the power source for any significant wheat price strength in months ahead.

     The U.S. Dollar Index reflects a strong Dollar value. Chinese Yuan per dollar continue to be within “Planning Ranges”, and the Russian Ruble is at its weakest against both the Dollar and the Yuan in a year making Russian wheat easier to buy for import, but may be causing some wrinkles on Putin’s forehead as it also makes it more expensive to operate a war.

     The general attitude in the markets is cautious optimism with regard to The Trump Effect. It is premature to try to make this into a major market factor.

     The Chicago December delivery contract is now in its 10th consecutive day of a tight sideways  range from $5.57 to $5.80. The pattern is maturing and the trade is likely to react to a breakout in either direction. All that is lacking is a motivational trigger factor…WASDE, Russian policy change, Chinese purchase…it does not have to be a big blast.

     The trend can be argued to be positive as long as it remains above the low end of the flat zone. The price is below the Box-o-Rox simple moving average line, which is a setup for scheduled incremental sales to be completed without delay. The good thing about our little flat zone is that it gives discreet price triggers not very far away from current trade levels.  It does require some discipline to act on those triggers!

     Stay tuned to this channel for the next chapter…

Market Bullets Wednesday November 6, 2024: Pre-Dawn

     Very early trade Wednesday Republican morning saw Chicago December delivery wheat contracts trading down 7-9 cents, KC Hard Red Winter (HRW) wheat down 8-9 and Minneapolis Hard Red Spring (HRS) off about 6 cents. No new signals, with the price near the center of the 8-session range between $5.58 and $5.80 in the Chicago December contract.   

     The November World Ag Supply/Demand Estimates (WASDE) will be released Friday Nov 8th, 9:00 AM Pacific / 11:00 Central.

     Interest rates are rising.

     Yuan is weaker – Dollar Index is Flat

     Gold is off $77 per Troy ounce on the Wednesday session.  $128 per Troy Ounce from its October 30 all-time high of $2,801.80. Global risk off? It is hazardous to assume causation on elections, but this bears some consideration. Gold was due for a retracement anyway.

     Diesel is off 3 cents per gallon, without changing the overall pattern yet.

     The world is already trying to adjust to a new Trump era. It is certain that a few world leaders are re-assessing their approach to the U.S. This may provide some factors capable of moving wheat prices.

     The trend in wheat is still flat, but the re-set of global traders assumptions, currencies, trade relations, etc is about to begin. This may provide some direction to the wheat market.

     Its going to be interesting for a while, with new grist for the market information mill.

Stay tuned!

Market Bullets Tuesday November 5, 2024: Pre-Dawn

     `Have you been suffering from EDS (Election Distraction Syndrome)? It’s about to be over, except for the crying and gnashing of teeth. It is not likely to impact the wheat market much (absent apocalypse, of course).

     The only solid sure thing post-election is uncertainty that will decline over time as decisions are made and implemented.  

     The Fed is going to be announcing their rate decision in the days following the closing of the polls.  

     Wheat crop condition for PNW states: WA 50% Good to Excellent (GEx) versus 56% Last Year, OR 63% vs 37% LY, ID 43% vs 73% LY.

     The drought is still present in HRW country, although this week may have helped some. As of the week just ended, TX is 24% GEx vs 44% LY, OK is 31% vs 49% LY, Nebraska is at 51% LY.

     National progress is 41% GEx vs 50% LY. This week’s GEx is 3% better than last week.

     Ukraine has shipped 7.9 million metric tonnes of wheat year-to-date. Their overall grain shipments have nearly reached 14.7 million tonnes, about 33% ahead of last year-to-date.

     In their first open tender session since last August, Egypt bought 290,000 metric tonnes of wheat, 120k from Ukraine, 120k from Romania and 50 from Bulgaria, all FOB and all on a delayed payment authorization. Russia offered but was not accepted.

     The market is not short of wheat for sale.

The U.S. Dollar Index reflected an October net 3.49% increase in global aggregate Dollar value versus a basket of other currencies, with the exception of the Chinese Yuan, which is not included in the Index calculation.

     The Russian Ruble versus U.S. Dollars, in a weakening trend for the last 4 months, is trading at levels last seen in October of 2023. This makes their wheat cheaper.  

     Paris Milling Wheat futures were down Monday, cracking below the previously buyer-defended price level and “neckline” for a head and shoulders negative pattern that projects downward to a test of the late August lows, some 10 Eurodollars below Monday’s closing price. The Paris market is sensitive to Black Sea wheat prices and increasing influential for U.S. pricing.  

     The charts are showing a flat pattern that will break up or down soon. There is no signal at present, but the shading is slightly negative. This by itself is not enough to change a marketing plan. Wait until you can see their eyes.

It’s a trackable world. Let’s track it!

Market Bullets Monday November 4, 2024: Pre-Dawn

     Türkiye’s overall production of grain for marketing year (MY) 2024/25 is forecast to drop year-over-year due to drier-than-normal weather conditions across most of the country. Despite wheat production falling year-over-year by almost 2.0 million metric tons (MMT), Türkiye still has heavy inventories of wheat that it is trying to liquidate.

     Widespread heavy precipitation totals are expected in the next week from Texas to the Great Lakes of 1 to up to 7 inches expected and heavier total in the south.

     Accumulated exports of all U.S. wheat so far in the 2024/25 crop year has totaled 9.3 million metric tonnes, up 36% from the same period last crop-year.

     China is indicating interest in Australian wheat offers for the first time in many months.

     The U.S. Dollar Index is showing a strong upward move that has repudiated the slight decline over the last week. Early Monday the Index was back up to week-ago levels, which is just below the highest point since July. The movement of the Index is moderately correlated with wheat prices, but there are many other factors that are more directly influential on the price of wheat.

     Very early Monday’s wheat trade shows a market wandering back and forth without vigor. Chicago was up 3½ but 5 cents below the earlier highs. KC up 2 and Minneapolis up 1 ¼ in December, but down 6-7 cents in deferred contracts for July through December 2025.  

The Russian Ruble is at its weakest point since the summer of 2023, against both the U.S. Dollar and against the Chinese Yuan; Perhaps a sign of economic stress.

Diesel is rising rapidly, though it has not broken out of recent trading ranges.

     There is not much of a trend, as the market has been unable to find a rationale for higher prices. The trade is well aware of Russian/Ukrainian moisture shortages, as well as French struggles with too much moisture. The southern hemisphere has no extreme wheat production problems as their harvest season looms. In this kind of price environment, the range between highs and lows can be 50 to 75 cents. Marketers of cash wheat are not best served by trying to capture all of that range, but opportunistic work can bump the net just by paying attention to breakouts.

    There are tools that help with weak or indecisive price markets. Call your merchandiser and ask about price enhancing contracts.

This stuff is trackable…if you can stay awake long enough! Let’s track it.  

Market Bullets Friday November 1, 2024: Weekly Close

Wheat markets worked hard all week but saw only small price movement. Net for the week ending November 1, 2024:

     For the last 3 trading sessions in Chicago Soft Red Winter (SRW) wheat, the lows of each day has been within a ¾-cent range. Which just so happens to be around $5.64, the neckline of the 42-session “head and shoulders” pattern in December wheat, AND the center of a price skirmish line reaching back to mid-July, AND is within a dime of both 22-week and 86-week geometric mean lines. There are probably more technical convergences, but those will do to go on with. This is an inflection point that is suitable upon which to build a longer-term price move…the problem of the day is to discern whether that turns out to be upward or downward. The practical approach is to choose “tripwire” prices on either side of this fair value zone that will “prove” that something is changing with enough force to move the herd  out of its now-familiar range. If the herd moves north, we will be conservative with sales. If south, we will be aggressive. It is beneficial to know what that fundamental “something” is, so we can gauge its potential intensity and duration, along with any changes, but in the absence of this information, we must still act on the trend via chart patterns until we know what its motivators are. If game becomes scarce at lower elevations due to drought, the cougars will follow the creek (and the herd) toward the mountains in search of better hunting. So shall we.

Take-aways:

     The wheat price is in a narrow, sideways range.

     There are no currently dominant fundamental factors strong enough to move prices out of the range.

     The easiest way to become aware of the emergence of a dominant fundamental force is with alerts based on the penetration of specific price levels on the charts.

     We may not be able to fully identify the fundamental changes in a timely way.

     We can expect that the prices will move before the factors are widely understood, thus we can use the charts to initiate actions to manage risk exposure and profitability, and then refine positions according to factors as they emerge.

More commentary Sunday PM  (sent Saturday, Nov 2, 2024 @ PM 5:00 PM)

Market Bullets Friday November 1, 2024: Pre-Dawn

     The wheat complex has been seeking a mandate for several weeks, moving very slowly downward from the highs of the first week of October.  The Chicago December contract has retraced all but the last 2 cents of a 61% retracement from those highs and is sitting uneasily on several significant technical support lines; the 60-day simple moving average (Box-o-Rox), the 86-week geometric mean line from last March, the 22-week mean line from October highs, and the neck line of a moderate head and shoulders top pattern. This confluence of lines and indicators of central tendency is a sensitive spot on the price charts, influencing the perspective of many traders and systems. Eventually the market will find a reason to move, but for now there is no momentum.

     Friday very early AM trade has Chicago up 3 cents, about 3 cents off of earlier highs. There are stable export sales being reported, Russia is still dry with scattered moisture in their forecast, and the southern hemisphere wheat crop is developing nicely. A large proportion of U.S. winter wheat areas have a good chance of moisture in the next 6-10 days.

     The beat goes on. Stay tuned for developments when they come.

Market Bullets Wednesday October 30, 2024: Pre-Dawn

     It is tempting to pull back on a planned marketing sale triggered by the market dropping through multiple technical markers, as Chicago December wheat contracts did on Tuesday, but there is nearly no market incentive to rally more than a nominal amount from present levels (right on top of the 60-day simple moving average and the “neckline” of our little Head and Shoulders negative reversal pattern). There are no systematic guarantees that wheat will not rally. It’s just that there has to be some better basis for a rally than a surprise government report showing winter wheat condition heading into November is not as good as many had expected. We still are sitting on quite a bit of wheat and expect to lay it off incrementally (and hopefully opportunistically) through the fall and winter months. Lay it off we will.

     Maybe the election and aftermath will yield some market-moving information, positive or negative. Meanwhile, the circus is nearing the end of Act I. It ain’t over yet, folks!

     Looking into the Palantir (crystal ball, for non-LOTR folks), it is murky. Russia’s attempt to commandeer a big chunk of the northern hemisphere wheat market is certainly not designed to assist us in selling wheat at a good price. China is distracted by the same program, for which they have pledged some support through the BRICS agreements (Brazil, Russia, India, China, and South Africa), under which a new international grain exchange operated for the benefit of members only is planned. Unless the wheat growing weather in Russia is seriously dry clear into spring, or there are diplomatic surprises to be observed after the election, or some other black-swan style  event, the price of wheat seems headed for a prolonged period of range-bound behavior. That can be interesting, but also exhausting for wheat marketers.

     The wheat price trendline is still under review, but the board is not all green. There are definite warning lights flashing. The positive bias that we had so ardently cheered in recent weeks is damaged. This is the reason for incremental sales.

Stay tuned.      

PS: gold is sniffing at new highs again.   

Market Bullets Monday October 28, 2024: Pre-Dawn

     Russia is wasting no time advancing a new wheat marketing program intended to set prices for sale to end users directly, in what amounts to an historical shift in global marketing patterns. Traditionally, grain origination companies whose daily business involves aggregation of grain ownership that is marketed to end-users, make competitive tender offers of grain originated from many sources upon request by importers, who then choose among these offers (or not). The system is price-transparent and competitive, not controlled by any one entity. It appears that the new, closed-end program with Russia, the largest exporter of wheat in the world, is expected to eliminate intermediary companies from export/import transactions with Russia, giving Russian entities a dominant position of price-making instead of price-taking, a form of cartel. The initial effect on wheat prices is likely to be positive to some extent, as the recent months of wheat sales have been done at a discount to known prices from the tender offer approach. As time passes, one expectation is that countries beneficial to Russia’s regime may receive more favorable terms than others. The success of this developing global grain movement regime will have an important effect on global wheat prices.

     Russian’s Grain Exporters Union has published a menu of export prices for Russian wheat indicating 12.5% protein FOB Black Sea at $240 per metric tonne for October, $245 for November and $250 for December.

     Net [U.S. wheat] sales for the period ended October 17 of 532,900 metric tons (MT) for 2024/2025 were 6% above the previous week. Crop-year-to-date total wheat export sales are running about 19% above the pace required to reach the most recent USDA whole year projection.    

     Argentina’s Rosario Grain Exchange estimates Argentine wheat exports at 13.3 million metric tonnes this year, a near-record and about 1 million metric tonnes above their 5-year average. Argentina is the world’s 5th largest exporter of wheat behind Australia, the U.S., Canada and Russia, in order.

     Sunday evening’s wheat trade saw Chicago December contracts down 8 cents to $5.61 within the first 30 minues. By 4:40 AM, the contract had climbed back to plus-1 cent on a steady increase. Kansas City Hard Red Winter (HRW) was also unchanged, while Minneapolis Hard Red Spring (HRS) was down 1½ in a very narrow range. The recent challenge of key supportive price levels continues without breakout (generally, a closing price is considered a more decisive failure of support, often avoiding whipsaw effects from standing orders at too-precise price points). The beat goes on. Monday’s close will tell the tale.

     The market is riding very close to well-known sensitive prices that might trigger a rush of volume. There is no efficient way to anticipate a move up and away or down and out. Alert patience is the trend-followers way.

Stay tuned.

PS: Diesel is back down to lows dating to October 1.

Market Bullets Friday October 25, 2024: Pre-Dawn

     Russia is proposing a new international grain exchange among the BRICS countries. The plan released in this week’s summit would take several years to get put into place. Reuters article <here>

      Weekly Export Sales data for the week just ended showed export bookings for wheat of 532,885 metric tonnes, a 5.7% increase over last week and in the top 25% of the trade estimates of 350,000 to 650,000 tonnes. 

     Wheat futures trading pattern is sideways, trading this week within the same range as the week of September 13 for Chicago Soft Red Winter (SRW). As of 3:30 AM Pacific Time, KC was down 9 and Minneapolis Hard Red Spring (HRS) was down 5 cents. The overall pattern is without strong bias in either direction, but there is clear downside potential on the charts, especially if the low side of the 7-week-old sideways range is broken ($5.60+- in Chicago December futures).

     The wheat market is in back seat mode to corn and soybeans, and without impulsive data, the money funds are being cagey and cautious, but they would jump on a technical break either direction in wheat. The call is steady, until it’s not…

     Stay with us, there will be more interesting developments soon.   

Market Bullets Thursday October 24, 2024: Pre-Dawn

     The trade is expecting a range of 350,000 to 650,000 metric tonnes of old-crop 2024/25 sales and 0 to 50,000 tonnes in 2025/26 sales in Thursday’s guvmint report. 

     Week-to-date Beans up 34 on export sales and corn up 17 cents on positive ethanol stats.

     Wheat is being supported on dry conditions in U.S. plains (forecasts improving) and Russian drought (forecasts steady – still dry). Australia and Argentina both seeing better moisture for wheat.

     Kazakhstan is expecting to export 7 to 7.5 million metric tonnes of wheat this crop-year, slightly below a 5-year average of roughly 8 million tonnes per year.  Kazakhstan’s relationship with Russia is close, but the Kazakh regime is authoritarian in nature, independent of Russian domination.

      At a current summit gathering between Brazil, Russia, India, China, and South Africa (BRICS), led by China and Russia, work continues on assembling a global economic system alternative to the U.S. Dollar. There are significant hurdles to overcome to achieve this, but there is increasing interest, especially from many authoritarian states around the globe. Among the changes proposed by Russia is the elimination of open market tenders for wheat import purchases, a significant threat to the price-transparent tradition that supports competitive wheat movement in global markets at present.    

     Wheat prices in Chicago Soft Red Winter (SRW) wheat in very early trade Thursday morning were sliding out of unchanged to slightly negative as of about 4:00 AM Pacific time. The ability of the wheat market to hold within a narrow sideways range just above some very sensitive price levels is the testament of a market that has no mandate. It may be that the looming U.S. presidential election is causing some delays in financial or trading decisions. The trendline that has given producers some hope of better prices ahead is under pressure. The longer this channel is sustained, the more valid the pattern becomes for discerning the next leg of the price journey. A break below $5.60-$5.64 for December SRW futures is the low side, likely to trigger money fund selling. A move above the $5.96 level is the first step toward a new upward leg, maybe inspiring short-covering.

     This is a test of patience for marketers and traders alike.

     Stay on plan. No need to go to DEFCON 3 just yet.

Market Bullets Wednesday October 23, 2024: Pre-Dawn

     Private Russia-based analyst SovEcon has released its first forecast for the 2025 Russian wheat crop, estimating production at 80.1 million metric tons (MMT), down from 81.5 MMT the previous year and below the average of 88.1 MMT.  Wheat crop could decline to the lowest level in four years amid adverse weather in major winter wheat growing regions. This factor is potentially a major price mover if the region continues in drought conditions. 

     The trend of slow and fitful escalation of wars in Ukraine/Russia and the Middle East has not changed. There is little current effect on global wheat prices, but the economic effects of these conflicts is bound to be negative.  

     Interest rates are in a long-term rising pattern, with increasing costs of debt service an expanding drag on North American interests, including the cost of farm inputs. The cost of unsold wheat storage is rising, both direct and indirect (per bushel costs and opportunity costs). The higher rates are a reflection of rising risks in ownership of fixed income paper, traditionally considered a “safe haven” in volatile periods, but now less so.  

     Australian wheat crop estimates are still expanding.

     The trendline in wheat is tentative and cannot be defined as reliably positive. Forward quotes for wheat deliveries into new crop 2025 are showing up and should not be ignored. At present there is no specific sell signal for wheat, as the technical support levels back to the August lows are still intact, but there is clearly a downside risk at present prices that could be triggered by a failure to hold at present prices above $5.60 (Using Chicago SRW as bellwether).

     This is a reasonable time to increase attention to global markets.

     Two representative items that have exhibited noticeable behaviors in the recent week(s) are December Gold futures and Home Depot stock. These two are irrelevant to wheat prices, but the background psych of the market is sometimes illustrated by individual things.

     Stay tuned. We will investigate anything and everything in an attempt to discern effects on the wheat price and on our business.   

Market Bullets Tuesday October 22, 2024: Pre-Dawn

     The U.S. dollar index is up 1.8% Month-to-Date, rising from a challenge of a technical support price zone that is almost 2 years old. Based on the index (which excludes the Chinese Yuan from its composition), the U.S. Dollar is the strongest it has been since the first week of last August. If the Fed does not lower interest rates, this short-term trend is likely to continue. In terms of the Chinese currency, the very short-term pattern is of dollar strength versus the Yuan, currently trading at 7.129 Yuan per dollar, up from a recent 6.97 Yuan level in September.

     For wheat, currencies play an indirect role in pricing, as foreign buyers must first buy dollars to pay for purchased wheat, hence a strong dollar is a price-negative factor.

     Winter wheat planting and emergence is either on or ahead of schedule in the PNW. National planting and emergence are 3-4% behind the five-year average.

     Another tidbit-detail about the latest Russian chess move in their attempt to garner control of a large segment of the global wheat market: Non-Russian bidders for Russian wheat going into international tenders must have long-term origination agreements with designated Russian companies to receive any wheat. This is causing some anxiety among the large, old-school grain merchandising companies that have dominated global trade. For the rest of us, the concern is loss of transparency of price and a possible trend among autocratic states toward similar types of oligarchic contracting.

     Food and energy in the hands of a dictator are much better weapons than nuclear missiles.

     Outside of improving moisture conditions in Argentina and Brazil, along with moderating forecasts in Russian dry areas, there are nearly no headlines directly associated with wheat markets. Corn is up about 10 cents from recent $4.00 lows a week ago, which was itself a new, higher low, the beginning of a new uptrend pattern. Beans are not as perky, but also working on a new, higher low also. One classic signature of an uptrend is a series of higher highs and higher lows.  

     The wheat market is grinding hard on technical support price zones, with Chicago trading early Tuesday morning right on top of the sensitive levels that have revealed buyer interest each time the market reached down over the last month and a half. There is bound to be risk management anxiety among traders and a potential trigger for the money funds to unleash more selling if those levels fail. Chicago’s support is between $5.60 and $5.64, which turns out to be a “neckline’ in a negative “Head and Shoulders” pattern that measures down to the late August lows around $5.20, about 50 cents of negative exposure.  This bears watching (no pun).

Stay tuned.  

PS - Home Depot (HD) a long term, very rewarding stock to own, dropped $8.60 per share on Monday. this is not a massive decline, but it comes only four days after putting in a new all-time high at $421.56. A 2% drop is noticeable, and because it is a profoundly fundamental business, could presage a market correction. Just sayin’.

Market Bullets Monday October 21, 2024: Pre-Dawn

     In keeping with an October 11 resolution by the Russian Grain Exporters Union, a list of “Approved” buyers was posted. Explicitly mentioned were Egypt, Tunisia, Algeria, Morocco, Jordan, Saudi Arabia, Bangladesh, Qatar, Kuwait, South Korea, Pakistan, India and Iraq. The intention is to lock in these buyers and make grain transactions direct and private, without public disclosure of prices or terms. The traditional open market system of open tender announcements, followed by announcement and selection of competing offers, would be eliminated for these major companies. The first apparent goal is to stop the discounting of Russian grain in global markets that has occurred due to international sanctions on banking transfers and embargoes on transactions with Russia due to its illegal invasion of Ukraine. The second is expansion of influence on the grain markets in general. The impact on wheat prices in the U.S. or other major wheat export sources is not likely to be dramatic in the short run, but if successful, will be a challenge to global wheat sellers.

     For the last 28 months or so, global wheat prices have seen prices decline, as Russian wheat has been the low price point. The Russian Grain Union resolution is not going to make a powerful influence right away, as open global pricing systems and trading exchanges will still be the price discovery of choice, for obvious reasons, but the attempt to corner wheat demand markets within Russia’s long reach is a factor that will be closely watched.

     Trading in the early morning hours of Monday, October 21 saw Chicago up 2-4 cents, KC 3-5 cents higher, and Minneapolis Spring wheat up 1-3. The next few sessions will be watched closely by the trade, as the price range currently being traded is very near key previous supportive levels. A failure to hold above the nominal $5.64 price, about a dime below present trade) would be likely to trigger some sell stops (standing orders to sell if a certain price is reached). If the range holds, the first step toward creation of a base for another upward leg will be established.

The trendline is still positive, if hanging on by only a few cents.

     The behavior of the wheat markets for the balance of this calendar year is likely to be choppy and frustrating, although there will be opportunities along the way for marketers of wheat. Speculative trade is bound to be especially hard work in this environment (not that it isn’t in any environment). If the plan is for incremental sales, the best we can to is track the directional patterns and underlying factors as closely as possible.

This stuff is trackable. Let’s track it!

Market Bullets Friday October 18, 2024: Weekly Close

     Chicago Dec closed 3 cents above the 60-day moving average. The small price support formation of multiple session lows has taken some damage, with the Friday settlement taking us back to September 20. For the week, Chicago was down 26 cents including Friday’s minus 16 cent move. KC Hard Red Winter was down 23, while Minnepolis Hard Red Spring (HRS) was off 31. None of the wheat charts put out a sell-signal, but Monday will be a critical day of “Go/No Go” for many traders.  

     It looks like the funds are re-building short-sold positions in Chicago , now at -26,013 contracts, having more than doubled their net shorts since October 4, even with a small reduction this week. This is still not a heavy position, but when the herd turns south, we have to take note.

     The trendline is still positive (sort-of), but the wheat price environment is not in great health. It takes money and buying intent among a large number of traders to sustain a continued upward move outside of an established trading range like the one between Sep 9th and the present. Most of those traders were wary of buying into the top of the range without something better than a hunch, especially if you have to explain it to the boss. On the marketing side, the market is close to our established sell-exit triggers.

     If I asked you to explain why you are sitting on a significant portion of your annual crop in storage, could you provide two good reasons? Tax doesn’t count here. And then, “What is the maximum loss you are prepared to sustain if the market does go downward from here?” The answers to these questions are yours. All you have to do is beat the “Box-o-Rox”, that is sell incrementally every month on a schedule unless the market is above the 60-day. As long as the market is above that average, then suspend all sales until it crosses back below. This is not a recipe for getting rich, but it will help the average annual sale be above the average whole-year price. It’s called the “Box-o-Rox” because its dumb as a box of rocks. It is correct and appropriate to improve this simple little system with rules developed based on experience, but there must be rules. Mostly it’s just a marker by which to measure your marketing system’s performance.

     U.S. wheat export sales for the week just ended were positive, just under the high end of pre-report guesses.

     The weather problems that had been keeping the market up have been reduced but by no means eliminated. The global wheat region dry weather story will still be a primary driver for some time yet.

More later. Stay tuned.

Market Bullets Friday October 18, 2024: Pre-Dawn

     The Chicago Mercantile Exchange (CME) has launched a new wheat spread series, now including Chicago wheat futures vs. European Milling Wheat (Paris). It’s U.S. Dollar denominated, and cash settled through one clearing house.  For traders, this is a way to eliminate complex trade placement, settlement issues and to cut costs. For marketers trying to be aware of global effects of Euro-zone wheat production and sales it is a valid trend-following tool.

     Moisture is improving Argentine, Australian and U.S. wheat growing conditions. Some of the Russian areas that had needed rain are still waiting for rain, bearing in mind that the area of concern is very wide and deep, not likely to see uniform conditions. In general, global wheat trading prices are calculating less weather risk than they were a week ago. The fact that U.S. markets are still steady is a mildly positive indicator, although there is little fundamentally to sustain upward momentum.  

     Chicago SRW wheat futures market, traditionally the global wheat price bellwether, is holding onto a slow rising pattern without much sizzle. Very early Friday morning trading had December delivery contracts at steady to positive levels, now about 15 cents above the first negative warning line of $5.75 (the lows of Wednesday and Thursday this week). Trading below this little “tripwire’ would suggest that a further decline to previous lows 10-15 cents below that is increasing in probability. One the upward side, the challenge is $6.17, about 27 cents higher than Friday mornings action. The 60-day simple moving average is at $5.70 in Chicago December contracts, about 18-19 cents below current trade.

     The only market that is doing anything of note is presently gold, printing a new all-time high at $2,729.30 per Troy ounce in the December contract just before midnight Thursday heading into Friday morning.  The factors most prominent for the present dramatic rise in gold are geopolitical tensions, a falling interest rate environment and economic stresses in China. The kind of money involved in running gold up by $1,000 per ounce in the last 2 years is not just retail jewelry makers. It takes lots of buying energy to accomplish such a move. At least some of the power seems to be coming from central banks. Inflation is also a factor.

     Wheat is still OK. The market is quiet, which tends to magnify whatever news does emerge.  Stay on plan, make the incremental sales if necessary, but the Box-o-Rox average is still posting a “hold” signal. The risk is clearly about 20-40 cents lower, without really changing the market overall direction.

Stay tuned.

Market Bullets Thursday October 17, 2024: Pre-Dawn

Big brush ideas to analyze by:

     Food and energy are the weapons of the future. People will do anything for food and heat. He who controls food and energy controls the world. Data is the means by which food and energy are managed.

     The data of the world is written on an infinite blackboard covered with the variables of a formula. The solution, way down in the lower right corner of the board, yields the coordinates of supply and demand…together identifying the price, satisfying the greatest number of transactions leading to efficient distribution. Prices move in time making an historical trend, which allows the calculation of probability, in turn allowing decision making.  

     Awareness of trends is essential to survival and growth.  Making decisions in the absence of knowledge of the trends is gambling.

     Wheat is on that blackboard.

     Very early trade on Thursday morning showed Chicago SRW unchanged, Minneapolis HRS plus-4, KC HRW plus-2 and Paris Milling Wheat up the equivalent of about 3 cents per bushel. The wheat market complex knows exactly where it is and sees no reason to get excited. Active global trade is continuing without having to bid up, witnessed by a few national tenders resulting in a “pass for later re-issue”.  The dry weather that had kept the buyer’s sails filled has moderated in some key wheat areas in the southern hemisphere and in wide zones of Russia. The Chinese have been focused on corn and soybeans, as prices for the grains have been at or near long-term lows.

     Wheat is floating just above an important price point that has been a skirmish line between buyers and sellers since early September. If this price inflection point continues to function, the next leg upward may launch from there ($5.60 to $5.75 Chicago December contract).  The top end of the recent range is $6.11 to $6.17, about 25-30 cents above present trading. The mildly positive trendline remains intact, but there is little momentum. It is a standoff until one of the tripwires is activated.

     It's trackable, if you can stay awake.

Market Bullets Tuesday October 15, 2024: Pre-Dawn

Very early AM wheat trading in all three major U.S. futures markets is 3-6 cents lower in December contracts, putting pressure on the low side of recent trading ranges. The driving factors are various, with improving weather the most negative, and Russian military movements the most positive.   

     ISW October 14, 2024: Russian forces struck civilian vessels docked at Ukrainian ports for the fourth time since October 5, part of an apparent Russian strike campaign targeting port areas to undermine Ukraine's grain corridor, spoil international support for Ukraine, and push Ukraine into premature negotiations.  

     Saudi Arabia’s General Food Security Authority (GFSA) is making moves toward a system of wheat import purchases that are not in the traditional tender pattern. Similar in effect to what the Russians are discussing, the Saudi program involves buying wheat through Saudi-owned grain origination agencies outside of the country and reduces the transparency of import wheat pricing. Although this is a vastly smaller program than the Russian concept of “direct” buying, the trend is toward a less market-wide, open pricing market organization. By the recent purchase of 13.2 million bushels of wheat, Saudi purchases have accumulated out to deliveries in January-March of 2025, implying that they will likely be less aggressive buyers in the near future.

     APK Inform (A Ukraine-based publication): As of October 1 this year, agricultural enterprises of the Russian Federation had 37 mln tonnes of grain in stock, which is 14.5% less than on the same date a year earlier. This is evidenced by the data of Rosstat (the Russian Federal State Statistics Service) .
At the same time, as of the reporting date, wheat stocks in these formations decreased by 17.4% year-on-year to 24.42 mln tonnes.  

     A bit of rain is in the nearby forecasts for some dry areas in the U.S. plains and in Argentina,  softening the edge of the bullish wheat weather price driver.

     All of the above are vague and, with the exception of the attacks on Ukrainian export programs, cannot be taken to be grossly price-moving items, but the background of the traditional global wheat pricing and distribution system is shifting.  Further developments are worthy of tracking.

     As indicated by Chicago wheat futures, the short-term momentum is negative, and a challenge of the lower boundaries of the upward-tilted price range is underway. Chicago is now less than 12 cents above the 60-day, “Box-o-Rox” trend indicator, a crude indicator of trend that may be applied to wheat marketing programs. This simple guide for incremental sales can be better over time than the random, “bin as checkbook” approaches to selling wheat. Call for details. The trend channel is still upward, but it is reasonable to keep track, as the market enters the northern hemisphere winter seasonal period where demand rules.

This stuff is trackable. Let’s track it!   

Market Bullets Monday October 14, 2024: Pre-Dawn

     Russia is indicating they will begin to apply brakes to their export program with increased taxes and quota adjustments, although they still need to accept below-market bids to finish their marketing year. The most recent announcement is of plans to increase its regular wheat export duty by 41% to become effective this Wednesday.

     Private crop analyst SovEcon is posting another 1.5 million tonnes lower Russian wheat harvest, now 81.5 million metric tonnes (-1.8%).

     Southern hemisphere wheat crops are closing in on healthy yields that will make them global export competitive.

     Just after midnight Chicago December contracts were trading within a penny of the closing price of September 13th, which was at that time 74 cents above the seasonal low in the last week of August. The market has not accomplished any serious gains since then, although there is a very gentle upward trend in higher highs and higher lows (the signature of most uptrends). The trading range has been narrowing, with lower volatility numbers causing option prices to wither slowly. There is a high boundary at about $6.17 and a low edge at about $5.84. These “tripwires” can be used as marketing alarms, the higher one for suspending incremental sales and the lower for triggering them. Meanwhile, there is no signal. The market is quiet. This is the kind of pattern we should expect for the next several months. The important thing is to stay on plan. There is still potential downside in prices.

     Big corn and bean crops, both northern and southern hemispheres. There is enough wheat to feed global markets. Good marketing does not have to be heroic, just thoughtful and thorough.

Stay tuned. The market will always give us opportunities.

Market Bullets Friday October 11, 2024: Close

October 11, 2024 WASDE:

     U.S. domestic ending stocks: 812 million bushels versus pre-report guesses averaging 821 million. Mild price positive.

     Global ending stocks: 257.7 million metric tonnes versus pre-report guess average 265 million. Mild price positive, although the new figure is a slight increase in global supplies Year over Year (YOY).

     The outlook for 2024/25 U.S. domestic wheat this month is for reduced supplies, larger domestic use, unchanged exports, and lower ending stocks. The global wheat outlook for 2024/25 is for reduced supplies, consumption, and trade but slightly higher ending stocks.

     Russia’s Ministry of Agriculture (Minselkhoz) held a meeting with Russian Union of Grain Exporters (RusGrain) on Friday October 11 and supported a push for direct export sales, “bypassing traders and intermediaries from other countries,” according to the Rusgrain Union. The general idea is apparently to favor “friendlies” and increase Russian influence over global wheat markets in general. One prominent feature of this policy is to decrease transparency of wheat prices. The policy is being portrayed as beneficial to “Consumers” by cutting out the middlemen, ultimately putting much greater pricing and political power in the hands of the Kremlin.

     Corn (-2)  and soybean (-10)  futures were both slightly lower at Friday’s close.

     CFTC Commitment of Traders (COT) report shows large spec traders have increased their net short-sold position in Chicago to about double what they were last week (now -13,498 contracts). Large specs in KC Hard Red Winter (HRW) have built up a net long of +4,910 contracts, the most on the long-bought side since August of 2023 and a change from a -3.839 net short last week.

     The wheat complex remains positive and has not pulled back from a challenge at the 38.2% ratio level, even though there are few strong fundamentals that demand rationing global wheat supplies via price. There is no sell signal on the charts, leaving marketers with an intact 2-month-old uptrend that lacks momentum. The challenge is honoring the uptrend line by holding off of incremental sales while knowing that at least half of the recent gains are vulnerable to a pullback (about 40 cents potential, which could translate to roughly 20 cents for PNW white wheat). The nice thing about incremental selling is that we can miss the breakout highs by selling the top of the recent range while still benefiting from the unsold balance. If it is bothering you, sell a nibble, then be able to cheer anyway if the market goes up.

Otherwise hold tough!

Stay tuned, there is always more.   

Market Bullets Friday October 11, 2024: Pre-Dawn

     The Russians have elevated their attacks on Ukrainian Black Sea grain export facilities and shipping, including private vessels. The most recent was this week, where six people died and eight were hurt. A series of ballistic missiles in at least 3 attacks have been used to discourage grain shippers from moving Ukrainian grain.   

     The WASDE report to be released on Friday morning at 9:00 AM Pacific will dominate the trades attention, but the intention of the market will be once again revealed shortly after the report is absorbed.

     A more detailed MarketBullets commentary will be posted Friday before 1:00 PM.

Stay loose, stay alert…agile, mobile and hostile! …as the coach used to say.   

Market Bullets Thursday October 10, 2024: Pre-Dawn

     The October USDA World Ag Supply/Demand Estimates (WASDE) report will be released Friday, October 11 at 9:00 AM Pacific Time and 11:00 am Central.

     Due to an accelerated purchasing program that began in September, Egyptian Prime Minister Mostafa Madbouly reported Wednesday that Egypt has enough wheat reserves for more than 5 1/2 months.

     Pre-WASDE report trade guesses for Friday’s monthly WASDE report show expectations for US ending stocks to be 821 million bushels versus 828 million bushels last month. World stocks are expected to be reported at 265.0 million metric tonnes versus 265.3 million tonnes last month. 

     Russian lack of moisture for planting and emergence remains a leading market factor, although there is potentially some relief in their 6–10-day forecast. Black Sea prices for wheat into Southeast Asia are reported to have increased in recent weeks from CIF $265 per metric tonne to about $280.  

     Israeli airstrikes have killed two more possible successors to Hezbollah, the primary proxy force in the region for Iran, according to Israeli Prime Minister Benjamin Netanyahu on Tuesday. Hezbollah  is said to be speaking of potential ceasefire talks.

     Russian mechanized units are reported to be accelerating their movements to try to gain some ground before the mud season makes movements across open fields difficult.

     The wheat price on Thursday early morning trade based on Chicago December futures is still rising, up about 8 cents. KC December contracts were also up about 8 cents, while Minneapolis Hard Red Spring (HRS) was lagging, up 3½ cents. The trendline is positive, now trading in Chicago about 39 cents above its 60-day simple moving average.

Since the last day of 2023, Chicago front-month contracts are down 21 cents, quite a lot of sweat and hard work to come such a short price distance!

     Thursday will be the pre-report positioning day ahead of the WASDE report Friday morning but will likely be dominated by corn and soybean attention, as harvest is beginning to pick up momentum in those crops.

Stay on this channel for further developments.

Market Bullets Wednesday October 9, 2024: Pre-Dawn

     Paris Milling wheat, the best indicator of Black Sea regional wheat values in the absence of transparency from Russia, is staying on its rising 31-day mean line from August 26th. The U.S. wheat markets are positive, although without a fundamental mandate, leaving the price vulnerable to technical volatility. The net positions held by the large speculative funds are broadly smaller, as capital has moved toward other commodities that have a greater profitable motivation, e.g. corn and soybeans.  

     In early Wednesday trade, PNW white wheat at $6.00 is near parity with Chicago at $6.00 per bushel around midnight Pacific Time Wednesday morning.

     This wheat market is moving upward, still below last week’s high in Chicago at $6.17, with a tech target at $6.41. There is no well-lit path, but a trend does not always explain itself. The patience required to stay in during such periods is based on awareness of the wisdom of the market as a conglomerate of many perceptions and little else. No mandate means in either direction.

     The herd is moving north, so shall we. Stay tuned.

Market Bullets Tuesday October 8, 2024: Pre-Dawn

     Accumulated shipments of U.S. wheat over the last week brought the marketing-year-to-date total to 8.61 million metric tonnes (316.44 million bushels), which is 34.59% greater than the same period last year. +The market knows this number very well.

     As northern hemisphere harvest winds to a close, Russian wheat production estimates for the year have been shrinking. One of the factors that has until now been absent from calculations is the impact of war on Russian farming. The three most effected oblasts affected by Ukrainian incursion are Belgorod, Bryansk and Voronezh, together normally accounting for up to 9 million metric tonnes of wheat produced annually. The disruption, when added to weather related problems have reduced Russian projections (Washington, Oregon and Idaho together produce between 5 and 6 million metric tonnes annually).

     The 70+ cent per bushel rise in Chicago wheat prices since August 27 to the present was presaged by a net short-sold position of -32,681 contracts in the hands of the Large Speculative group of traders according to the Commodity Futures Trading Commission’s (CFTC) Commitment of Traders (COT) weekly reports of the period. The current net short position is -6,132, suggesting that 26,549 contracts of wheat have been “covered” or bought back in Chicago wheat futures over the last 29 trading sessions. This is a common phenomenon, but the latent buying energy represented by the large, short-sold position has been mostly exhausted. For the big trading funds to be motivated to continue to buy wheat, we need a more compelling fundamental setup. Continued incremental adjustments over time in wheat stats by various agencies is probably not enough to push the funds into the aggressive buying required to produce an extended upward trend.

Global import buyers are not feeling pressure to accelerate buying. Interest rates are re-gaining some upward momentum, making grain storage more expensive. The U.S. Dollar is strengthening (mild indirect U.S. wheat price negative influence), as the Russian Ruble is weakening (indirect Russian wheat price positive influence). Gold is quiet. Diesel has been pushing higher, but is pausing in the last 24-hours (not a wheat price factor, but a key operational input price).

     The wheat trend is upward, but there are significant technical hurdles. Chart price barriers are not walls in the sky, but they reveal repeated points at which the buyers and sellers have tested each other and are likely to clash again. The current market is just below an inflection point at the 38.2% retracement line which, unless it is penetrated with some vigor, may be enough to turn wheat prices back toward the negative side to test the old lows once again. This is the range trader’s dilemma; at the top of a known previous price range, it can be argued to sell the range-top, but the risk is to see a break-out to the upside that may sling-shot the price into the next target, 57 cents higher at the 61.8% line. For marketers, it is a point that requires recognition that the downside of at least 30 cents is at hand.

     If the price factors do not shift dramatically, range-trade is to be expected. Incremental sales, especially if cash is needed to cover expenses, are sensible at range tops, but the trend is still upward, and the main rule we live by is to hold as long as that is the defined pattern (above the 60-day moving average at least).

     A failure to hold above the $5.75-$5.60 range in December Chicago wheat futures would be a warning. The old multi-year low is $5.20+-. The upside target is first $6.40 (50% retracement) followed by $6.68 (61.8%).

     We will stick to the trend (“hide and watch” as Cousin Terry would say), but we will also have a slice of wheat planned for quick sale if the trip-lines are triggered.

Stay tuned.          

Market Bullets Monday October 7, 2024: Pre-Dawn

     USDA Small Grains Summary and Stocks reports marking the end of September and the 3rd calendar quarter were a wash. When USDA puts out a status quo set of numbers, it relieves the trade from having to adjust trading plans. The market proceeds to do what it was going to do anyway. In this case there was no big breakout either way.

     The Russian Ruble is trading at its weakest of the year. This is not a direct factor in wheat, except for the fact that it makes Russian wheat less expensive for China, Egypt, India, Turkey and Bangladesh. If Russian wheat rises in Dollar terms that does not necessarily translate into price increases to that group.

     The wheat chart has validated the “old-fashioned “resistance” levels at the 38.2% retracement ratio price once again. The bigger picture appears to be a “rounding bottom” on the daily chart of Chicago wheat. It is the kind of chart pattern that has the potential to awaken the money funds and trigger some capital entry. If the question at hand is, “Do we see a seasonal low in the rear view mirror?”, the answer to date is a conditional “Yes”.

     The next challenge (unless we encounter a significant failure of the upward pattern) is the 61.8% ratio target, now 82 cents above current price levels. It will take some new fundamental ideas entering the market to accomplish this, as in severe dryness in wide areas of wheat production, starting with the southern hemisphere and extending northward,  or a dramatic expansion in the middle eastern war – not on the radar screen today.      

     Diesel is still rising, now at levels last traded in the first week of September, right on top of the declining 593-day mean line reaching back to June of 2022, as it approaches the 38.2% ratio target. OPEC+ (Including Russia) is working on expanded production cuts intended to maintain prices. The trendline is shifting toward a positive slope.

     China’s “People’s National Day” holiday ends Monday with a full return to trading Tuesday.

     Russia’s “too dry to plant” weather is still a factor, but there is some rain in the 6-10 day forecast.

     This wheat market is still in a defined up-trend, even as we see a pullback from recent 3-month highs. The warning line of a failure in Chicago December wheat  contracts is roughly $5.60, about 25-30 cents below the after midnight trading levels on Monday morning.

Stay on this channel for the next chapter.  

Market Bullets Friday October 4, 2024: AM

     Chicago wheat has given back most of the gains of Tuesday and Wednesday, and just before the close Friday was trading at $5.88, 4 cents above Tuesday’s opening trade of the day session.

     PNW White wheat coast bids were steady Friday morning at $6.00 nearby, but the overall environment was not.

     Diesel is popping up along with crude oil due to the rising threat to Iranian oil production facilities from Israeli air attacks.

     Interest rates reflected by 2-year and longer treasury paper are rising, triggering a parallel rise in the U.S. Dollar Index.

     Gold is not printing any new highs.

More after the close. Stay tuned.

Market Bullets Thursday October 3, 2024: Pre-Dawn

     Wednesday very early trade showed wheat in a narrow range, within 3 cents of unchanged on either side. The news wires are concentrating on war.

     Paris Milling Wheat blew through its 38% upward retracement line on Wednesday like an Express Freight Running Late on a Hot Date. The December contract closed up €6.25 per metric tonne ($.19 per bushel), pushing the two-day total to €11.50/tonne ($.35/bushel). KC Hard Red Winter (HRW), a near match for protein, gained 21 cents on the day, with a two-day total of 33¾ cents, also breaking thru a retracement line, while Minneapolis Hard Red Spring (HRS) gained 14.

     Russia: They are delaying or seeding into dust in a large portion of Russian winter wheat country, now 600,000 hectares behind schedule in the Southern and Volga regions.

     There has been another drone hit on export facilities in Odesa, Ukraine. A grain loading facility was damaged.  

     Western Australia is also suffering from lack of moisture, reducing production estimates incrementally.

     Diesel is moving upward, but Wednesday’s trade closed well below its daily high.

     The Russian Ruble is trading lightly against the U.S. Dollar, but is at its weakest in a year. The Ruble’s relationship with the Chinese Yuan, now its official benchmark currency since June, is also at its weakest in 12 months. This is not yet at emergency levels, but it does make it more expensive to import war materials and weapons. Iran and China both have military and economic distractions of their own, so assistance to Putin is less prominent in the news. The effect on wheat prices of these factors is indirect, but probably a net positive.

     The trend in wheat prices is positive, with the world on a hair trigger. The perception of risk is rising in the world, with energy and food front of mind for many. Dry conditions in Russia and Balkan states is the short-term market driver. It is reasonable to be slow on the trigger for cash wheat sales. Chicago is 47 cents above the 60-day, Box-o-Rox simple moving average.

     Stay tuned to this channel. If things change we will see it in the charts early.

     Stay tuned to this channel. If things change we will see it in the charts early.

Market Bullets Tuesday October 1, 2024: Close

     Wheat futures in Chicago are following the path to challenging the previous high of $5.98¾ on September 13th to set up an attempt to overcome the Fibonacci ratio 38.2% target at $6.11 on daily charts. Immediately after that, there is one more old high hurdle that looms at $6.15 from the first week of July. The trade is well aware of this thicket of old fashioned “resistance” levels. It is the kind of chart pattern that has the potential to awaken the money funds and trigger some capital entry.    

     U.S. Dollar Index is stabilizing above the key support price zone which has consistently shown sufficient buyer interest each time it has been tested by the market over the last 22 months. Since this index is skewed toward European currency sensitivity, the war(s) in Ukraine and around Israel are more of an issue. In an environment that is threatening to destabilize large portions of the eastern hemisphere, the U.S. Dollar remains the most socio-political currency. A failure of the Greenback to hold its index above this price zone would be a significant development, affecting global trade and pricing, and making its tracking useful.

     Diesel is still rising, now at levels last traded in the first week of September, right on top of the declining 593-day mean line reaching back to June of 2022, as it approaches the 38.2% ratio target.

     Interest rates are steady.

     Stay cool. Trade with the trend.

Market Bullets Tuesday October 1, 2024: Close

     Chicago December delivery contracts posted the highest since July 11. Closing settlement was the highest close since July 5th. Chicago is now at the challenge level that requires a significant close above $6.15 to confirm.

     KC Hard Red Winter (HRW) gained 12.

     Minneapolis Hard Red Spring (HRS) up 13.

     Paris Milling Wheat up the equivalent of 16 cents.

     U.S. Winter wheat planting on schedule at 38%.

     Iran is expected to attack Israel shortly (Surprise!).

     The trend in wheat is upward. This is a day-by-day analysis, with some “non-normal” factors. Chicago is 32 cents above its simple 60-day moving average.   

Stay tuned.

Market Bullets Tuesday October 1, 2024: pre-Dawn

     Diesel backing down, now trading at same level as September 17.

     Wheat trend is positive, with a lack of conviction. The money funds are the most likely source of movement until a fundamental factor emerges. Production in the southern hemisphere or continued worsening in Russian wheat country growing conditions.

     Commentary over the next few days may be limited due to family meeting responsibilities. Charts will be updated as normal.

     This stuff is actually trackable. Let’s track it!

Market Bullets Monday September 30, 2024: Post-Report Close

      Monday, September 30th  - USDA Annual Small Grains Summary and Stocks-In-All-Positions reports were released at 9:00 AM Pacific time / 11:00 Central.

U.S. Domestic Wheat Production. (In Billion Bushels):

Pre-Report Average Trade Guesses:

All Wheat       All Winter       Hard Red         Soft Red          White              Spring             Durum                     

1.966               1.350           .768                 .342                 .244                .540            .760

USDA Reported:

All Wheat       All Winter       Hard Red         Soft Red          White              Spring             Durum                     

1.971               1.249           .770                 .342                 .236                .542                .800

Above+ or Below- Trade guess

+ .005            - .101            +.002                =                   -.008                +.002              +.040              

Pre-Report average guess for Stocks-In-All-Positions report: All Wheat: 1.973 Billion versus 1.76 last year.

USDA Reported:                                                                     All Wheat: 1.985 Billion versus 1.767 last year.           

     The net result of the report was a wash.  There were no surprises. Stocks of wheat have  been counted at .012 billion (12 million) bushels more than the average trade expectation. The result was a very slight jump in prices that was quickly pulled back into line with previous trading levels and a closing settlement a few pennies up on the day. A “relief rally”. The brakes are off. The quarter is closed. The market will move on.

     Corn settled up about 6 cents and beans were down a dime. The grains complex does not have a confluence of effect.

     The trend in wheat is still an upward slope. There are clear boundaries on the downside. Stay tuned for more on the daily.

Market Bullets Monday September 30, 2024: Pre-Dawn

     The Chicago December wheat contract on the long-term chart is trading within 25 cents of its 18-year geometric mean line, which is nearly horizontally flat.

     The U.S. Dollar Index is down as we enter the last trading day of September, closing out the month and the 3rd calendar quarter.

     Interest rates are steady to slightly higher than last week’s close.

     Gold has pulled back slightly from its all-time highs printed last week at $2,708.70 per Troy ounce in the December delivery contract.

     The wheat market is awaiting a key USDA report Monday morning.

     Israel continues to shock their enemies with ahead-of-the-curve movements.

     Putin is feeling enough pressure to threaten nuclear responses toward those supporting Ukrainian efforts, especially as they have been attacking into Russian territory with some success.  

     More commentary following the data-dump.

Stay tuned.

Market Bullets Friday September 27, 2024: Close

     Chicago December wheat contracts remain in a 23-session upward slope on the charts, trading about 60 cents higher than the August 27th low. The Friday closing price is 15 cents above the 60-day moving average, keeping our “hold” indicator lit for incremental marketing sales. The trend is slender, but every day it continues unbroken makes it more credible. The price support tripwire alarm zone is $5.14-$5.20. A close within this zone is a warning. A close below it is a new downward bias and a continuation of the downtrend that began in May of 2023.    

     Not to be gloomy, but the last time Chicago wheat contracts went sideways in the same zone as the present high-low range, it lasted over 6 years…there were opportunities all along the way, but it was more demanding of serious wheat marketers.  

     U.S. Dollar Index is down just 1.12% on the month.

     Gold December delivery contracts printed a fresh, all-time high on Thursday, but backed off for the first lower close since September 17th on Friday. The 45-degree angle of gold’s price rise over the 32 weeks since mid-February of 2024 has carried that metal up more than $700 per Troy ounce to $2,708. The trend line is still very strong.  

     Monday morning will be dominated by USDA data releases (see Friday Pre-Dawn Update for more information).

     More commentary after the reports.

Stay with us on this train. It’s bound for glory!

Market Bullets Friday September 27, 2024: Pre-Dawn

      Monday, September 30th  - USDA Annual Small Grains Summary and Stocks-In-All-Positions reports are due at 9:00 AM Pacific time / 11:00 Central.

Pre-report average estimates of U.S. wheat production stats (In Billion Bushels):

All Wheat        All Winter       Hard Red         Soft Red          White              Spring             Durum                     

1.966               1.350               .768                 .342                 .244                 .540                 .076

     The trade creates these pre-report guesses through various surveys, then USDA offers new stats. If the trade is wrong by more than a few percent, the market reacts very quickly to adjust. Surprises stimulate volatility and sometimes set up a new long-term price range. If the trade has it close to right on, then the market is free to resume whatever it was doing before the pause ahead of the report. Sometimes it’s a kind of “brakes off” attitude after a report reveals nothing new, allowing position adjustments.

     Russia’s wheat seeding pace is at an 11-year low on lack of moisture.

     USDA reports All Wheat 2024/25 export sales for the week ended on September 19 at a marketing year low of 158,938 metric tonnes, below the 200,000 - 600,000 metric tonne estimates.

     Most government and private wheat fundamental analysts around the globe have been making very incremental adjustments to their wheat production reports. This is an indication of a market that is growing complacent about wheat supply.

     The Chicago wheat price pattern after midnight heading into Friday morning was quietly trading down 1-3 cents just below the Wednesday/Thursday high/low range.  KC Hard Red Winter (HRW) was off just 1 cent, and Minneapolis Hard Red Spring (HRS) futures were only about ¾-cent off of Thursday’s close. The overall short-term trend pattern is flat, sitting right on top of the 17-session mean line back to September 4th, now trading 68 cents above the low of $5.14 set back in the first week of August. With a major report due out Monday morning, Friday’s market tone is likely to be subdued unless there is an injection of anxiety from the war(s) or weird political activities, but it is month-end and quarter-end as of the close Monday, so the money funds may be needing to make last moment position adjustments, making room for some volatility. There is a chance for some fireworks on Monday.  

It’s trackable. Let’s track it!

Market Bullets Thursday September 26, 2024: Pre-Dawn

     Very early trade in wheat Thursday morning shows a couple of cents of follow-thru from Wednesday’s powerful upward shot. The market is in a vulnerable price zone, approaching a technical challenge of important price chart levels.  

     Wheat prices have yet to achieve the 38.2% retracement level*, about $6.11 in Chicago December contract prices. (see Daily chart above). If that upward hurdle is overcome, the next upward retracement ratio target is the 61.8% price around $6.68, about 57 cents more. A pullback from the present price area (failure to penetrate the $6.11) would suggest the market has begun to exhaust its buying resources and will need to re-test the lows around $5.14 again. Base-building at long-term lows is often a teejus affair, but let’s not allow the market to fade below the 59-session mean at $5.98 without taking a little bite if appropriate to plan.

*”Retracements” are usually significant contra-trend moves. The retracements to which we refer here are prices moving back upward from lows toward previous highs. It has been shown that these moves are often expressed by the markets in repeated ratios of the downward price moves. The numbers are derived from a well-known pattern known as the “golden ratio”, or “divine proportion” made popular by followers of the mathematician Fibonacci. The use of these figures may seem like voodoo, or tarot cards to some, but they have been useful in real world applications. Call for more detail and references for further study.

    Tropical Storm Helene is nearing hurricane strength in the Gulf. The storm is expected to be very wide, heavy, and likely to interrupt corn and bean harvesting, but not to the point of extreme damage. Not a big market mover for wheat.

     2-year Treasury yields are trading near 3.53%, having printed new long-term lows overnight. The trend in interest rates is lower, a factor for weak Dollars, and indirectly toward better wheat prices.

Opinion/Editorial:

     Global financial transparency has been a pillar of reality-checking for a long time. Whenever the geopolitical environment would get out of balance in some way, it has always been possible to take the temperature of the world by looking at the markets. This is still true, with Copper, crude oil, interest rates, global dry bulk freight, Hong Kong Index, etcetera…all taken in a general, trend-watching, volatility-measuring way. This may be a small comfort in a world that seems to be coming off its hinges, but the alternatives for trustworthy data all seem to be twisted into political pretzels in various ways (journalism is in trouble).

     The futures markets are mostly driven by real decisions using real money, an underpinning of self-interest that is reassuring in its reflection of the human propensity for the careful and deliberate handling of wealth. The markets are not reflecting fear and loathing, at least not yet. Even wheat and the other food commodities are more stable than the aggregate of the news networks might lead one to believe. If this “money serenity” changed suddenly, through the lens of the commodity markets we would know with greater certainty than if it were debated on CNN, FOX or TikTok. Even the equity markets are more prone to whimsical decisions than the futures markets, but that is old news.

     The thing that is making us a little uneasy is what appears to be an unraveling of the rug, or more succinctly, the Ruble. That little window on reality provided by the patterns displayed by that currency in global markets is now closed, and it is no longer possible to find a public quote on Russian (Urals) crude oil. These things are not central to most of our lives, and do not carry a big impact on most of our western world, but the loss of  transparent and open trade data is a serious problem for a world that is running short of good, reliable factors that make free trade possible. This is pushing us toward a very different scenario than we would prefer, one in which openness and mutual gain is no longer the prime directive.

     Can we do anything more than observe and try to understand? We must not allow ourselves to be pushed into an unbalanced, emotional state. One thing is for certain; we can reduce anxiety and stress by knowing more. Fear, anger, hatred, suspicion, and all of the other nasty feelings that we have seen on vivid display of late are base products of ignorance. It behooves us to work like hell to shuck off ignorance and make good decisions with a good will. Observing the commodity markets is a small way of achieving a step toward knowledge, one of our best goals.    

Stay tuned, stay focused, stay cool.

Market Bullets Wednesday September 25 2024: Pre-Dawn

     The December contract for Chicago wheat futures is trading about 85 cents per bushel above the calendar year low of $4.93½ in July. The trendline is positive, but has struggled to make progress in September. The driving factors for the rise have been short-covering by the large money funds, and a fair number of crop production estimate declines from various global wheat regions, none of which taken alone would have the power to spook the market higher, but as an aggregate are limiting the supply numbers ahead. The war(s) have had the effect of making the global wheat markets wary, but not agitated.

     U.S. corn and soybean crop conditions are each more than 10% above their 5-year average Good-to-Excellent ranges to date.

     Ukraine’s 2025 winter wheat planted acreage estimate may increase if they receive decent October rains. They are substantially behind last year’s pace of seeding at this point.

     Monday, September 30th at 9:00 AM Pacific Time / 11:00 Central, USDA will release the Annual Small Grains Summary and the Quarterly Stocks-in-All Positions reports. The pre-report trade talk is that wheat stocks are expected at an average guess of 1.973 billion bushels, in a range of 1.794 to 2.09 billion. The numbers are from a Reuters survey.

 Gold once again posts a new all-time high at $2,694.90 per Troy ounce, the 8th new high in the last 10 sessions, now about $269 above the previous significant pause at a high price on August 20th.

     Chinese Yuan versus the U.S. Dollar is in strengthening phase, trading at its strongest since May of 2023, as the U.S. Dollar Index (which does not include the Yuan in its calculation) is trading at its weakest since July of 2023. The drivers for the Dollar Index include an interest rate decline as part of a drop in “real” interest rates in short-term paper (rate – inflation and  taxes). The People’s Bank of China unveiled a massive stimulus program today. The indirect effect on U.S. wheat exports is to make dollar-denominated wheat less expensive in terms of other currencies.

     The wheat market is hunting for a mandate. The trend is positive (sort-of) and above the 60-day simple moving average, lighting the “hold” button on the board. That average is at $5.66 in Chicago December futures, about a dime under the current trading level. This is a slender margin, so should be observed. If that occurs, we will see it!

Market Bullets Tuesday September 24 2024: Pre-Dawn

     Black Sea (Russian) wheat growing conditions have encounted some adversity. Too dry in the west and too wet in the eastern regions.

     Australia has pulled back on their crop projections, especially in the Western Australian (WA) region where their “finishing” rains as the crop reaches maturity have been too little.

     U.S. winter wheat planting is on schedule at about 25% done versus a normal 26%. Spring wheat harvest is done.

     The wheat price in Chicago on Monday was strong, up about 13 cents in December contracts. KC showed a plus-10 and Minneapolis a plus-8. PNW white wheat coast delivery bids gained a dime back to $5.95. Paris was up $.13,  altogether a positive day across the board. The big factor is a conglomerate of small negative adjustments in growing conditions in both hemispheres.

     The trend in wheat prices is upward, a young and uncertain move, but with some promise. This requires some tracking.

Stay tuned for more on this channel.  

Market Bullets Monday September 23, 2024: Pre-Dawn

     Sunday after midnight, heading into a new Monday session, Chicago December wheat contracts were up 7½ cents, just barely below the high points of last Thursday and Friday’s ranges. Kansas City Hard Red Winter (HRW) wheat futures were up 5-6 cents, along with Minneapolis Hard Red Spring (HRS) Dec also up 7½. Corn and Soybeans were on-board, from 4-10 cents better respectively.

     The rapid decline in open interest (outstanding futures contracts, each consisting of a buyer and a seller) in Chicago wheat appears to be at an end, having dropped almost 73,000 contracts since late August, the smallest participation since last January. The fact that this decline occurred during a price rally into the teeth of the norther hemisphere harvest’s end suggests that many of the short-sold contracts that had been held by the money funds for weeks and months have been covered (bought back) without rolling them into deferred months. The funds have some dry powder and can be expected to re-construct a larger wheat position in weeks to come, but the direction of that effort is yet to be told. It does make it look like the seasonal lows are printed. A chapter is closing.

     The positive trend in the wheat price is a spindly little seedling that will need time to grow. Meanwhile the marketer should be patient. We use the 60-day simple moving average as a guide for throttle-setting. If the current price is above that average, hold. If the cash price drops below, get caught up. If cash manages to hold above the line, minimize sales. It’s dumb simple, like a box o’ Rox…It can obviously be improved in many ways, but by itself it is reliable as an indicator of intermediate trend. The intention is to hit the annual average of wheat prices or better… a whole lot better in years when the uptrend is strong, and the same goes for when the trend is very negative. It can save us from holding onto a bad position too long.  Call for more discussion. (509) 337-8417 between 11:00 AM and 3:00 PM Pacific Time.    

     “The lack of spring rain across the grain growing regions of Western Australia has resulted in what was, over the last two months an increasingly high potential tonnage year, to now looking less likely”, according to the Grain Industry of Western Australia Crop Report on September 20th.  

     Gold futures December contract hit a new all-time high of $2,659.80 per Troy ounce in very early trade Tuesday morning. Gold has gained $660 per troy ounce in the last 157 trading days since the calendar year low on February 14th, 2024. “Gold prices have continued to hit fresh highs in 2024 due to a wide range of factors — from escalating geopolitical risks and the interest rate outlook to budget deficit concerns, inflation hedging and central bank buying.” according to JP Morgan’s Gregory Shearer, Head of Base and Precious Metals Strategy.

     There is something about this rally in gold that is important as a warning. We need to watch the currencies and bank behavior.

     Opinion:  This market is nervous, although the interest rates and outside markets all seem to be “business as usual”. Ukraine is still alive and kicking. There are reasons to keep up the resistance to Putin. He should not be encouraged. Israel is ahead of the war-curve at the moment. The benefit to us in the Middle East of Israeli strength is a discouragement of the axis that is being created between Russia and the Iranians. Ultimately the Chinese are very carefully observing the various messes and calculating their approach to Taiwan.   

This stuff is trackable. Let’s track it!  

Market Bullets Friday September 20, 2024: Pre-Dawn

     Thursday put wheat prices back to near unchanged from Wednesday’s close. Week-to-date, Chicago December futures are entering Friday at about minus 24 cents. The price range is hanging just above the 60-day moving average, flirting with a key support zone that has been tested before around the 54-session mean line at $5.58. If this little congestion zone holds up to the selling pressure, we may be able to launch a fresh new week next week with a minor mandate for upward movement. This analysis is short-term and does not help much with actual trend following, but it is an exercise in tonal examination, or detection in market attitude (mostly entertainment while we wait for new input, i.e. the Small Grains Summary and Quarterly Inventory reports due out on the 30th at 9:00 AM Pacific / 11:OO Central. If that mean line along previous buyer support lines does not sustain, then the old low is bound to be tested again.

     In yet another tiresome episode, congress must pass a new U.S. government funding measure by September 30th to prevent a shutdown.

     The International Grains Council (IGC) The International Grains Council (IGC) trimmed its forecast for 2024-25 global wheat production by 1 MMT to 798 MMT, though that would still be up 3 MMT (just 0.4%) from last year. These microscopic adjustments bear almost no weight in day-to-day wheat price movement.

     Russian wheat harvest is about 80% completed. The US Department of Agriculture (USDA) Foreign Agricultural Service (FAS) is projecting a 9.3% decrease in Russia's wheat crop in 2024 compared to 2023, to 83 million metric tons (MMT).

     Approximately 90% of the world's wheat is produced in the Northern Hemisphere. Since about 68% of the world's land mass and approximately 67% to 70% of the world's arable land is located in the Northern Hemisphere, the competition for sales between Russia, the U.S., Canada and Ukraine is bound to intensify, putting pressure on efforts to be efficient, although Russia apparently still has many millions of hectares of land that have yet to become wheat producing. Efficient production points directly at the technology of wheat production, including bio-technology. The regulatory acceptance of GMO wheat is the easy part. It is end-user acceptance of the product that has prevented any GMO wheat from being developed or grown in the U.S…until now.

     The U.S. Department of Agriculture (USDA) has approved the production of a drought-tolerant, genetically modified (GMO) wheat variety, HB4, developed by Bioceres Crop Solutions. The USDA's Animal and Plant Health Inspection Service (APHIS) concluded that HB4 wheat is not a greater risk of becoming a plant pest than traditional wheat varieties. This means that HB4 wheat will not be subject to the strict regulations that govern genetically engineered organisms.

     Will the end-users agree with this assessment? Is the gain in efficiency enough to overcome obvious consumer resistance?  These are serious questions that will haunt U.S. domestic users and global customers, forcing a global decision that had been deferred since the resounding rejection of Monsanto’s “Roundup Ready” variety a couple of decades ago. It begs the question, “Is this the comeback for the idea of Identity Preserved wheat?”

     Noticeable: December gold futures have gained $660 per Troy ounce since mid-February, putting in a new all-time high at $2,637.90/ounce Friday morning September 20, 2024.

Stay tuned.    

Market Bullets Thursday September 19, 2024: Pre-Dawn

     The Ukrainian government declares 2024/25 wheat exports will be limited to 16.2 million  metric tonnes, 20% of which has already been shipped.

     Private Russian analyst SovEcon increased their 2024 wheat production estimate by 400,000 metric tonnes to 82.9 million tonnes.

     The pace of Chinese imports of wheat has reached long-term, multi-year lows.

     Ukraine has achieved a serious blow to Russian stockpiles of missiles, artillery ammunition and other supplies in a  major storage depot in Russian territory, some 300 miles from the Ukrainian border.

     The best indicator available for Black Sea wheat prices remains Paris milling wheat. If the Ukrainian efforts begin to be a game-changer, the effect of wheat, if any, will show in Paris first.

     The behavior of wheat prices in Chicago on Thursday early AM trade is weak. By 2:08 AM Pacific Daylight time the December price was breaking into new intra-day lows, down 6¼ cents at $5.69½. KC Hard Red Winter (HRW) December contracts were also off about 6-7 cents, while Minneapolis Hard Red Spring (HRS) was down 4½.

     Chicago wheat has given back almost all of last week’s 28-cent gains, and early Thursday trade in the December contract was right on top of the 60-day moving average. A close below $5.67 would light the “go ahead” button for incremental sales according to the “Box-o-Rox” rules (call or text for details). A failure to hold above the $5.60 price low from September 9th would likely trigger additional selling energy in the market. The tone is negative.

This stuff is trackable. Let’s track it!  

Market Bullets Wednesday September 18, 2024: PM

Interest rate sensitive markets reacted to the Fed annoucement of a .50% rate cut with a shrug. They had already positioned it.

The Russian ruble is trading at its weakest value on international markets, including in the Yuan and the Dollar since October 10, 2023.

Gold touched a new all-time high on Wednesday morning, then settled a bit lower.

The wheat market was flat to very slightly lower across the board, including Paris milling wheat, down .75 Euros per metric tonne (about $.02).

Market Bullets Wednesday September 18, 2024: Pre-Dawn

     Wednesday early AM trade had Chicago and KC up 2-3 cents, and Minneapolis HRS up 1-2 cents.

     Tuesday’s trade in the wheat futures complex gave no change in any of the three major U.S. exchanges. Paris milling wheat was down €1.25 per metric tonne (about $.04 per bushel) at the close of trade Tuesday. Chicago Soft Red Winter (SRW) wheat remains in a holding pattern in the top 30% of recent trade ranges.  

     “What is the trend in wheat prices?” This is what emerges: The December Chicago futures price is trading in the same daily range as it was on July 15. The current trade is about 23 cents below the high from last Friday, and 55 cents above the low from August 27. In a market that has become accustomed to thinking about wheat price changes in terms of dollars per bushel, the recent flat sideways range is 77 cents from low to high. Enough for some opportunistic trading, but for marketing purposes that is a very narrow range over two months old that has not allowed a trend to emerge. The long-awaited seasonal low is probably in, but that does not define a shift to an uptrend, only a point of reference.

     We work with what we have; a definable low that will function as a tripwire alarm if it is broken downward, and a grinding upward tendency that will allow the exercise of patience.

     Wheat producer sales have slowed.  In the northern hemisphere most farmers have shifted out of harvest’s shorter operational (spending) gears into the tall, speedier (planning) ones. All of those informal estimates we made all season long about efficiency, expenses, and volume are now backlit by real numbers.  The consensus is that overall things went “…pretty good”.  Most of the easy sales of wheat to pay short-term expenses have been completed, so the bushels that remain are entering positions that will require some higher prices to lure them back out again.

     There is an expansion of war expectations marked by exploding pagers in Lebanon and cross-border activities into Russian ground by Ukraine. Putin declares that only he can strike with impunity anywhere in Ukrainian territory using foreign-made weapons. Certainly the Ukrainians will understand that they must fight with one hand tied. Meanwhile Israel’s leadership continues to be castigated for a conflict that was obviously initiated by their sworn enemies. The global anxiety about this vague but ominous trend is a factor for wheat prices at some point. It is not at all clear whether it is for higher or lower effect, but probably more for volatility than trend. More on this later.

     This is an environment that requires a wider lens observation. The trend is still above the 60-day, “Box-o-Rox” moving average by a mere 8-10 cents, still nominally positive, but without conviction.

We’ll try again tomorrow…Stay tuned.   

Market Bullets Monday September 16, 2024: Pre-Dawn

     Another new all-time high in December delivery gold contracts at $2,617.40 per Troy ounce on Sunday evening heading into Monday, September 16.  

     Diesel is not showing any new tendency to rally, still trading within a few cents of its lows that date back to December 2021. Crude oil, Diesel’s parent contract, is trading quietly at $69.04 per barrel, near its  challenge low last week on Tuesday at $65.27.

     The global economic environment is clouded for the moment with Chinese domestic issues that may require some vigorous fiscal “easing” (sound familiar?). With Russia still on a wartime economic basis, aggressively selling whatever they can to raise capital, and the Israelis distracted by a continuing expensive and risky war effort, world business is not demanding energy and materials like it would without these problems. Meanwhile there is still wheat for sale, although farm selling in the U.S. has slowed as producers are aware that the seasonal lows are probably in, although there is not a long list of reasons to rally wheat prices. 

     PNW white wheat prices are trading on parity with Chicago, not an unheard-of condition, but also historically a point from which to expect expansion in the basis.  

     Chicago wheat is trading at its 38.2% ratio of retracement of the previous downward move from its late May high point. This is a testing price. If the December cannot move decisively above that level (around $6.12) toward the next ratio target at $6.42 or so, it would be likely to see a challenge of the $5.14 lows of early August (Our “Seasonal” lows). For the moment there is a pause for any kind of cue, like maybe the Federal reserve interest rate game, or the quarterly Stocks-In-All-Positions or the Small Grains Summary reports at the end of the month. The short-term slope is still positive and above the 60-Day moving average, displaying a “hold” on incremental sales unless the current price ($5.86) drops below that number; $5.68 early Monday (yes the number is reversed).

     The Federal Reserve Board will announce rate changes after its two-day policy meeting ends on Wednesday. The trade consensus is that they will cut rates by between 25 or 50 basis points. Either way, it will be the first rate cut from the Fed since early 2020 and the bond and equity markets are really likely to be subdued until this key bit of data is released. For wheat it is unlikely to have a direct impact, but the price of money has some influence over everything.

     U.S. Army Corps of Engineers has announced normal planned lock maintenance on the Columbia River from March 9 to March 22, 2025, slowing or halting wheat and other barge traffic and letting the railroads have a moment to go to work.  

     The market will move, we just have to be aware of it when it does. Stay tuned.

Market Bullets Thursday September 12, 2024: AM - Post-USDA Report

A civilian commercial bulk vessel loaded with Ukrainian grain was hit Thursday morning by a Russian cruise missile just outside of Ukrainian territorial waters off the Romanian port of Constanta. The ship did not sink and there were no casualties reported.  

Wheat market reaction to the September World Ag Supply/Demand Estimates (WASDE) was muted. Corn was the featured factor and that market immediately swung back and forth in a 10-cent range, balancing out after the first fifteen minutes with the December contract down about 4 cents.

World wheat production is lowered 1.4 million tons to 796.9 million, but remains a record, as a reduction in the EU is only partially offset by higher production for Australia and Ukraine.

Global wheat consumption is increased 0.9 million tons to 804.9 million, primarily on higher feed and residual use for several countries more than offsetting a reduction for the EU.

See WASDE <here>

Gold December futures hit a new all-time high of $2,583.60 per Troy ounce on Thursday morning. The previous high of $2,570.40 was printed on August 20.       

Market Bullets Thursday September 12, 2024: Pre-Dawn

 Market Bullets Thursday September 12, 2024: Pre-Dawn

     Thursday morning, USDA’s World Ag Supply/Demand Estimates Report due out 9:00 AM Pacific / 11:00 AM Central. Bloomberg surveyed analysts put up an average pre-report guess of a less-than-one-percent reduction in U.S. ending stocks of wheat (822 million bushels – down just 6 million). The trade talk is for slight reductions in overall production figures both U.S. and global. Demand will be the focus. No surprises are expected.

     There is a USDA “Small Grains Summary” due out September 30th at 9:00 AM Pacific / 11:00 Central, which will show acreage, area planted and harvested, yield and production of wheat, oats, barley, and rye, by state and U.S.; also wheat production by class. The WASDE for Thursday, September 12 will be somewhat muted in advance of the more sophisticated stats pending.

     Per USDA’s Foreign Ag Service on September 10: “Biblical” rain in Kazakhstan’s major growing regions has cut wheat and barley production, reducing its quantity and quality. In the previous Kazakhstan Grain and Feed Report, Post warned that if the worst-case scenario of rains occurred during harvest, up to 10 to 15 percent of the barley and wheat crop could be lost. Post has revised the production estimate for wheat down from 15.8 MMT to 14.2 MMT and barley down from 3.4 MMT to 3.0 MMT, or 10 percent less than the August 20 estimate.

     Kazakhstan was in recent years the 14th largest wheat producing region in the world, but their exports of wheat vary as their production levels swing broadly. They border Russia to the north and west, China to the east, Kyrgyzstan to the southeast, Uzbekistan to the south, and Turkmenistan to the southwest, with a coastline along the Caspian Sea. They are an independent country and a member state of the United Nations, World Trade Organization, Commonwealth of Independent States, Shanghai Cooperation Organization, Eurasian Economic Union, Collective Security Treaty Organization, Organization for Security and Cooperation in Europe, Organization of Islamic Cooperation, Organization of Turkic States, and International Organization of Turkic Culture.

     Street says that Kazakh citizens and uneasy about Russia’s invasion of Ukraine, with some feeling that there is a chance it could happen to them, as well. There are strong economic ties to Russia, but they are not dominated by Putin.

     The circumstances in Kazakhstan may represent only a few percent of the global wheat production and trade, but this is an example of a possible “death by a thousand cuts” stealth scenario that could emerge as a global wheat price driver. Moisture as a rule eventually turns out to be a net positive, even when excessive, but “The answer my friend, is blowin’ in the wind.” Thankyou Mr. Dylan.

     Wheat price charts are are showing some energy in very early trade Thursday  after midnight. Chicago was up 8 cents or more in the December contract. KC also up about 7, and Minneapolis Hard Red Spring (HRS) was trading up 6-8. Paris Milling wheat December futures was up €2.00 per metric tonne (about 6 cents per bushel). All of this is somewhat unusual activity ahead of a WASDE report.

     Chicago’s pattern is trading firmly above the Box-o-Rox 60-day moving average, which is a very simple and crude signal to hold up on incremental sales of wheat…to “hide and watch” as cousin Terry would say.  The short-term technical target for this attempt at an uptrend is around the 38% retracement level of the downward move that started in late May of 2024. That would be something like a +25-cent move from the current December SRW futures price.

     At least there is something to watch. Stay with us. There will be more.  

Market Bullets Wednesday September 11, 2024: Pre-Dawn

     USDA’s World Ag Supply/Demand Estimates Report due out Thursday morning, 9:00 AM Pacific / 11:00 AM Central. Bloomberg surveyed analysts put up an average pre-report guess of a less-than-one-percent reduction in U.S. ending stocks of wheat (822 million bushels – down just 6 million). The trade talk is for slight reductions in overall production figures both U.S. and global. Demand will be the focus. No surprises are expected.

     E.U. officials are reporting crop-year-to-date exports of wheat at 4.82 million metric tonnes versus 6.25 million tonnes by the same week last year.  

     Interest rates as represented by the 2-year and 10-year Treasury Notes continue to ease. The September Fed meeting is coming, and the trade expects a rate cut, which is already baked into the market.

     Gold is sniffing at the record highs ($2,570.40 per Troy ounce) from August 20th,  trading at $2,555.00 just after midnight Wednesday morning). At least partly due to slow expansion of war in Ukraine as Iran indicates material support for Russia and Chinese/Russian joint naval exercises are planned in the Pacific. Israel is unable to agree to Hamas demands for cease-fire as hostages die and Iran promises retaliatory strikes.

     Crude oil and diesel fuel contracts are not indicating anxiety. There is some softening of Ruble values versus the Yuan (The official global settlement currency of Russia since June 2024 as the Petro-Dollar has become difficult to negotiate due to banking sanctions).

     Copper, often a decent indicator of global manufacturing and construction activity demand for the essential red tubing and wire metal, is trading at about $4.1455 per pound, just above its 44-month mean line of about $3.96, suggesting business as usual.

     Very early trade Wednesday had Chicago wheat up almost a nickel, while KC Hard Red Winter (HRW0 was about a penny better than Chicago’s effort. Minneapolis Hard Red Spring (HRS) contracts were trading steadily at plus 4½. Chicago has now reached a high almost 65 cents above the first week of August levels, less than 15 cents from a ratio target representing a 38.2% retracement of the entire move down from the May high of $7.20. A confirmation above this target places the next hurdle at $6.42, another 63 cents above current prices. The market is capable of such a move, which would represent a decent marketing opportunity.

     With a background of global anxiety “wall of worry” is a classic sneaky upward adjustment environment. Lets not be asleep on this!

Stay tuned.   

Market Bullets Tuesday September 10, 2024: Pre-Dawn

     Russia’s IKAR cut its estimate for the country’s wheat production to 82.2 MMT, down 1.6 from its last estimate; exports were cut by 0.5 MMT down to 44 MMT. Both of these are now below of USDA ahead of Thursday’s upcoming report.

     China is facing increasing indications of deflation, where prices fall and money becomes scarce, a condition opposite to inflation, but at least as uncomfortable. The last major episode of deflation in the U.S. was in the early 1930’s, after capital became hard to find following a large number of bank failures. For consumers who are deeply leveraged, common in the U.S., paying off debts becomes more expensive, as a dollar is more valuable over time in deflationary conditions. During inflationary periods, dollars become less valuable, benefiting borrowers (especially the government, the largest debtor). Both inflation and deflation are most influenced by the operational effects of money supply under the direction of central banks, such as the Federal Reserve.  

     Russian wheat harvest is past 72% completed.

     PNW winter wheat seeding is slightly ahead of schedule: WA 34% done vs 27% average, OR 4% done vs 6% and ID 6% vs 7% for a net 4% lead…not a market-mover stat!

     Subsoil Moisture: WA 64% short-to-very-short, OR 72% STVS and ID 54%.  

     Topsoil Moisture: WA 53% STVS, OR 77% STVS and ID 65%.

     There are many wheat production sources in the northern hemisphere that have not found optimal conditions for harvest this year. Most of the U.S. wheat producing states are 50%-60% Short-to-very-short. If moisture conditions do not improve, the wheat complex may have to re-calc the supply in the next crop-year. Its way early to dig into next year’s crop stats, but if the market begins to perceive a significant balance sheet shift, it may finally change the tone enough to allow us to see a lift off of long-term low ranges.

     That’s the best we can find to read this market. The wheat price pattern is flat. There is no buy signal yet, so stay on marketing plan incremental sales.  

     Check in here often. You never know when the weather will change, nor the market.

Market Bullets Monday September  9, 2024: Pre-Dawn

     Paris Milling Wheat contracts indicating -€1.50 in early AM trading. Chicago is off about 1-3 cents, while KC is flat to plus 1½. Minneapolis is the weakest, down 2½. Chicago wheat was struggling with a lack of interest until about 2:30 AM Pacific Daylight Time, but then showed a little, 4-cent spike of buying without much follow thru, kind of like a “head-fake”, but no gain on the play.

     Treasury paper is still leaning toward lower rate movement, with the expiring September futures contract about to shift to the Dec with a small bump in anticipation of lower rates this fall.

     Crude oil and Diesel are flat on Early Monday trade, displaying very small gains. Both put in lower closes on Friday. The trendlines in fossil fuels continue to be weak.

     The U.S. Dollar Index is floating near its 8-month lows.

     The trading environment is in a quiet disarray, as large factors capable of moving the markets are merely rumbling and groaning underground. In this kind of market weather, we try to use the futures markets as feelers, a bit like a spider uses one corner of a large web to detect movement. Currencies, metals, energies and food are sensitive to upsets, so we rely on those markets as indicators of market health. We apply this surveillance for wheat market analysis and for global market temperature for general purposes. We will see trends changes developing in the charts early. The old-timers will tell you that the market makes the news, rather than the news making the market. A large proportion of the time, by the time it hits the wires, its already in the market.

     The price trend in wheat is still in a downtrend as official chart status. If the marketing plan says sell a bit, better getr done. The odds of a significant more up are flat.  There certainly is plenty of potential for higher prices, but there is a lack of emotional fuel to run the buying engines. We will stay tuned so you can stay tuned.   

Market Bullets Friday September  6, 2024: PM Weekly Close

     From the professor: 2-Year Treasury Notes are at their lowest interest rate price since March 24, 2024. 10-Year Treasury Notes and 30-Year T-Bonds are at their lowest interest rate since August of 2024. A noticeable feature of interest rate declines is a weaker U.S. Dollar, as capital flows to the best real rate of return among various currencies. The interest rate, minus inflation, minus taxes, with a dash of estimated economic stability is the “Real” rate. The higher the price of a T-bill, T-Note, Corporate bond, etc., the lower the rate of return, and vice versa. For wheat marketers, interest rates affect the cost of storage of unsold wheat over time, as the capital in that wheat is not earning while it is stored...”opportunity cost”.

     Diesel, at a new low on Friday morning, is at its lowest since December 2021, and is a factor in the easing crude oil price. Economic slowing and the market’s apparent conclusion that the risk of war effects on fuel costs is declining.

     On Monday morning, at 5:30 AM Pacific Time/7:30 AM Central, the Canadian Ag Statistics agency (StatsCan) will release their All-Wheat stocks report. The trade’s pre-report average guess is 3.555 million metric tonnes versus 3.512 million tonnes last year at this point. Canola is guessed at 2.925 million tonnes versus 1.506 last year. With China threatening a trade tariff against Canadian canola (as Canada, in concert with the U.S. and E.U.) is imposing tariffs on Chinese electric cars), the suggestion is that canola prices may be soft for some time.   

     The Chicago December wheat delivery futures contract closed out the week ended on September 6th, 7½ cents below the “Box-O-Rox” marketing indicator (invented years ago by your MarketBullets® editor in an effort to simplify an beginning point for marketing plans). It’s only a 60-day simple moving average, accounting for about 90 calendar days. The rules are plain: Divide your total annual production by 12, creating 12 portions of wheat, each about 8.3% of the total. Then each month at the close of the first trading day check to see if the current price is above or below the BoR average.  If above, hold off making a contract for sale of the 8.3% of your crop designated for that month. Then observe the price movement each day until it closes below the average upon which the increment in question is sold. For each month that passes with the current price above the BoR, accumulate more 8.3% portions of the crop unsold until the price closes below the BoR and then release all of the accumulation at current price. If the current price never rises above the BoRe, then make each incremental sale on the first week of the month as scheduled, holding the balance of the wheat unsold.

     At the end of the year, the average BoR sale price for the year will be at or near the average price available for that period. The object is to be actively selling if the trend is downward and actively hold back if the trend is upward.  

     Can the program be improved or refined? Certainly! If you did not perceive at least a couple of ways to make the program better performing, or a better fit for your operation, you should read it again. This is really just an indicator that will cause more accurate assessment of the trend through the year. If you have no other concrete, systematic gauge of when to sell wheat, you will have mixed results over time, some of which could be disastrous. Yah, you do remember that year, don’t you?

     The short-term upward shot for the last couple of weeks in wheat is being eyed as an opportunity to sell by some. There is only marginal fundamental support for wheat prices, so technical analysis becomes the only game in town. Fund short-covering and other shenanigans will move wheat prices sometimes, but this kind of market diet can cause volatility.

     The trend is still weak and the big picture remains negative. Sell on schedule. Its still trackable. Let’s track it!  

Market Bullets Friday September  6, 2024: Pre-Dawn

     Open interest in Chicago wheat futures has declined as the price has increased over the past seven sessions, suggesting short-covering, even though the net positions shown by the CFTC’s Commitment of Traders Reports have remained steady in past weeks. As the short-sold contracts are bought back, the contracts are eliminated as the participants withdraw from the market. If the buying continues after the shorts are covered, the price may continue upward along with an increase in open interest.

     There is a growing consensus that there will be a corn and soybean crop in the U.S. this year. Most expectations are for overall corn yields to be 182-183 bushels per acre and soybeans to yield about 53 bushels/acre. Both figures lead to an expansion in carryout stocks at the end of the season. The market has little reason at this point to fear shortage, although there is still time for crop condition issues to appear.

     Fertilizer prices continue on the defensive, now six consecutive weeks slightly lower. Natural Gas, representing 60% - 70% of anhydrous production costs, is trading in a narrow band sideways that is now 10 months or more in duration.

     Chicago front month wheat contracts are trading within a penny or two of the low first traded in June of 2023. Since that date, the price range of Soft Red Winter (SRW) wheat has been between $7.77 on the high edge and $5.14 on the low down, a $2.63 cent rolli-coaster. In the small hours of Friday morning, September 6, 2024 the December futures contract is trading at $5.74 with a two-week upward move from the recent multi-year lows just 7 sessions back. This is not yet an uptrend, and the trade discussions about, “Is it over already?” are working hard at visualizing continued strength, but it is hard work grinding something from nothing. All of the fundamental stories in the news stream are small marginal changes in statistics and business as usual for global trade. If the basic rules of marketing are 1) If there is an uptrend, hold on. 2) If there is a downtrend, sell on schedule, aggressively if necessary, and 3) If there is no trend do nothing unless the plan is specifically designed to sell incrementally. There is not much of a trend. Sell on schedule.  Be opportunistic…take the small gifts when they come.

We will see the trend change when it comes. Stay tuned.

Market Bullets Thursday September 5, 2024: Pre-Dawn

As this is written, Chicago December is trading down 7½ cents from Wednesday’s buoyant close. PNW white wheat coast bids are at parity with Chicago (basis = 0).

     Harvest in the northern hemisphere is essentially completed, defining supply with no risk of shrink except for usage. The market must seek demand, which usually implies lower prices, but producer selling has slowed and there are quality issues in the European Union which Russia/Ukraine cannot cover. Money movement is the probable main driver in the current two-week upward shot, some from big spec funds taking profits and some capital from equity markets sensing a pending value expansion in commodities in general…inflation driven?

     The main trendline for wheat is under review, but has not changed yet. There are some signs of buying energy beyond a mere contra-trend “correction”, e.g. Chicago Dec contracts have moved above their 60-day simple moving average for the first time since mid-June, although the price is wobbling back and forth right on top of the daily calculation of that average. Confidence is still weak among spec traders in any real shift in direction. They are likely to replace any recently abandoned short-sold positions on any hint of exhaustion in the short-term, and intuitively it still seems risky to establish any significant new long-bought positions without some solid rationale.

     There is a period of post-harvest quiet while the world waits for the southern hemisphere thrashing to begin. Strong trend movements are a little less common in this time. Good marketing then requires a bit more attention to maximize returns.

     Stay tuned, there is always a little more.  

     The Chicago December wheat futures contract is trading about 25 cents below its 18-year mean, which is nearly flat/horizontal, a remarkable fact in the face of so much global anxiety. Perhaps it’s a good time to reflect on the truth of, “The more things change, the more they stay the same.” Everything is not an emergency. There is time to think about our path before we charge headlong where angels fear to tread.

Market Bullets Thursday September 5, 2024: Pre-Dawn

As this is written, Chicago December is trading down 7½ cents from Wednesday’s buoyant close.

     Harvest in the northern hemisphere is essentially completed, defining supply with no risk of shrink except for usage. The market must seek demand, which usually implies lower prices, but producer selling has slowed and there are quality issues in the European Union which Russia/Ukraine cannot cover. Money movement is the probable main driver in the current two-week upward shot, some from big spec funds taking profits and some capital from equity markets sensing a pending value expansion in commodities in general…inflation driven?

     The main trendline for wheat is under review, but has not changed yet. There are some signs of buying energy beyond a mere contra-trend “correction”, e.g. Chicago Dec contracts have moved above their 60-day simple moving average for the first time since mid-June, although the price is wobbling back and forth right on top of the daily calculation of that average. Confidence is still weak among spec traders of any real shift in direction. They are likely to replace any recently abandoned short-sold positions on any hint of exhaustion in the short-term, and intuitively it still seems risky to establish any significant new long-bought positions without some solid rationale.

     There is a period of post-harvest quiet while the world waits for the southern hemisphere thrashing to begin. Strong trend movements are a little less common in this time. Good marketing then requires a bit more attention to maximize returns.

     Stay tuned, there is always a little more.  

     The Chicago December wheat futures contract is trading about 25 cents below its 18-year mean, which is nearly flat/horizontal, a remarkable fact in the face of so much global anxiety. Perhaps it’s a good time to reflect on the truth of, “The more things change, the more they stay the same.” Everything is not an emergency. There is time to think about our path before we charge headlong where angels fear to tread.

Market Bullets Wednesday September 4, 2024: Pre-Dawn

     Australian wheat crop projections continue to expand, as the “Australian Bureau of Agricultural and Resource Economics and Sciences” (ABARES) has increased their 2024/25 wheat production forecast by 2.7 million  metric tonnes to 31.8 million tonnes.

     China is unhappy about tariffs being placed on their exports of electric vehicles by Canada (along with the U.S. and the European Union). They have declared that they will target Canadian canola sales into China, labeling them as “unfairly low priced”, a very thin veil on a retaliatory action, as well as being an unremarkable choice, as there are abundant alternative sources for Canola. It is just another sign of deterioration of open international trade along the fracture lines between the more authoritarian states and less authoritarian ones, although the difference seems to be in flux. For wheat marketers, the global markets are more visibly political than some previous periods, making price volatility more likely.  The potential for concentration of control over ever larger wheat producing regions by Putin’s Russia is an unsavory idea.

     The Chicago Soft Red Winter (SRW) weekly chart (December contract) shows an upward ratio target range between38.2% ($5.92) and 61.8 % ($6.41). If the trade is able to scrape together sufficient buying power to achieve a move into this range, it will be a decent marketing opportunity. KC Hard Red Winter (HRW) December has a similar target range between $6.46 and $6.84, while Minneapolis Hard Red Spring (HRS) is working on $6.41 to $6.89.

     The kind of ranges this market is capable of are in the 25-75 cent variety. Asking more than that seems intuitively excessive.

This stuff is trackable. Let’s track it!     

Market Bullets Tuesday September 3, 2024: Pre-Dawn

     Paris Milling Wheat Futures have bounced out of their lowest price since last spring. In the last 5 consecutive trading sessions including Monday September 2nd (Labor Day is celebrated on May 1st in France). The Paris contract has climbed €17 per metric tonne, or about $.50 per bushel. The dramatic statistical decline in estimates of the French wheat crop after a long and miserably wet harvest was the primary driver, but there was a featured short-covering component involved as well, comparable to the U.S. markets. The swift move up was also similar to U.S. markets in that it did not change the prevailing negative trendline. Russia is still aggressively selling wheat, The Ukraine is still able to ship wheat without being too fussy about price, and the U.S. harvest was a success. There is still plenty of wheat for sale in the world. The first weeks of the new month will have to show a positive pattern without new long-term lows in order to cause a shift in trend.

     The Paris wheat market is sometimes the leader, even though Chicago is still the bellwether of the world. The balance of the calendar year will be spent watching for demand. The effects of corn and soybeans in their efforts to find homes for all of those heavy bushels will register on wheat, their sister market.

     The retail price of road diesel in Walla Walla and Columbia Counties is within a nickel of regular gasoline for the first time in recent memory.  

     Outside of war effects and Political distractions, the wheat complex is entering a period where marketers must be opportunistic, for lack of a major trend. For some of us, that is an engaging task that is a never-ending puzzle. For others it may be a grim and grinding chore. There is no reason to suffer!  The more you groove into the trend ID, the easier it gets. The effect of concentration on the wheat market is to make us better investors and traders in all things market-oriented. It also can reduce anxiety.

     Stay tuned for another chapter in “Days of Our Wheat”.  

Market Bullets Friday August 30, 2024: Close

     Chicago Soft Red Winter (SRW) futures  front month (December) finished the week about 31 cents above the low of August 27th, a four year low. The week was driven mostly by short-covering as we closed out a week and a month, heading for the Labor Day Weekend. Money movement always has a sunny day when there is no other dominant factor in the market. As we re-enter the “real” world on Tuesday, we will be watching weather on corn and soybeans.

     It occurs to us that if Israel reaches any substantive agreement with Hamas it will probably be a price negative for crude oil. It just seems intuitive that a reduction in stress in that part of the world will cause a risk adjustment, at least short-term. A period of relative calm may break out in the global markets.

     Australia is shaping toward a large wheat production year with decent moisture, maybe the only real variable that counts at this stage of their wheat development. Talk is of a 31 million metric tonne crop. ‘Tis still a long way to Tipperary.

     Russian wheat exports are lagging last year’s pace by about 5%.

     The Commodity Futures Trading Commission’s Commitment of Traders (COT) report shows there are still relatively large net short-sold positions in each of the three major futures contracts. Marginal adjustments of a few thousand contracts in a week’s time are not market movers. The last few days of short-covering may show up as position reductions in the next report.

     It is premature to call the rally of the last week a “trend change”. The market is healthier with a more balanced participation structure between Commercials and Speculative firms, as it reduces the chances of violent price movements in either direction. This may disappoint some traders or marketers, but it does make the business of buying and selling cash wheat smoother, ultimately speeding consumption, reducing supply and...voila! Better prices!

     Keep cool and don’t over-do it at the picnic! We will be back with you on Tuesday in the pre-dawn hours.  

Market Bullets Friday August 30, 2024: Pre-Dawn

     The market already knows this: Estimated French soft wheat exports for this season will be only 4.1 million metric tonnes, down 60% from last year and below the 10 million tonne 5-year average, and the lowest in 23 years. The wheat harvest is expected to total 25.17 million tonnes, the smallest crop in 41 years.

     Ukraine’s Ag Ministry reports wheat exports since July 1st at 3.4 million metric tonnes. All-Grain exports so far in August stand at 3.0 MMT, up from 1.9 MMT last year. In 2020, Ukraine exported approximately 16.6 million metric tonnes of wheat. The next year, the year before the 2022 invasion, they exported about 23 million metric tonnes. In 2023 the wheat total was about 12 million tonnes. Consider what the market effect will be when they return to full productivity.

     Diesel prices are buoyant, but have not left the established range from August 2 to the present, about 21 trading days in duration. The larger picture is still a lower trend.

     The Chinese Yuan is stronger versus the U.S. Dollar, the Ruble is weaker versus both the Yuan and the Dollar. This is not a short-term price factor, but if the Chinese are going to buy, it should show up soon, while a cheap Ruble sets up an even more attractive Russian export wheat price.

     Gold is setting up a little, old-school “rising triangle” pattern to try a break-out to a new all-time high. The funds are pretty heavily long. Who would be the sellers here if the tech pattern fails? This contract is traditionally strong in a fear-dominated market, with inflation or anticipation of global economic problems. It deserves some observation time.

     Global markets are getting more technically integrated, allowing access to more timely information and trading of wheat.  Chicago Mercantile Exchange (EuroNext) is activating a new set of intermarket wheat spread contacts between both Chicago and KC HRW versus Paris Milling Wheat in October. Stay tuned here for more information.  https://www.cmegroup.com/markets/agriculture/grains/wheat-spread-futures.html?redirect=/wheatspread

     The short-covering rally in wheat as we cross month-end and enter a 3-day, Labor Day weekend has been refreshing to see, but is inadequate to declare a trend-change. Corn and Soybeans are dominating the trade’s market vision right now. The wheat price trend is still classified as negative. Stay on plan as we move into September. The strong carrying charge market structure is still mostly intact, making some of the add-on marketing strategies attractive. Call your merchant.

     The trading volume is likely to taper off early Friday, as many traders escape for the last family 3-day  holiday weekend of the season.

     Football 2-a-Day’s…oh those wind-sprints!

Take a day or two and consider what is really valuable in your life…then review your wheat trading plan!

Market Bullets Thursday August 29, 2024 : Pre-Dawn

     Paris Milling Wheat December futures put up two days in a row of positive price movement on Tuesday and Wednesday, the first two-day upmove since mid-July. This little reversal is influential, as it is in a market that is the clearest representation available of Black Sea wheat values, but in this case it is reflecting a poor harvest in France, Germany and other continental wheat production areas of Europe.

     Russian Rubles are weakening, both in terms of its official reference currency (Chinese Yuan) and the U.S. Dollar, now approaching the largest number of Rubles per unit in each currency since October of 2023. This is not a direct wheat price factor, but it does suggest that the economy of the world’s largest exporter of wheat is undergoing changes. It is only a yellow light flashing on the dashboard at this point, but it deserves monitoring. Russian bushels are slightly less costly to China as a direct result.

     A couple of days of short-covering going into a tree-day weekend do not a bottom make! We need to see it on the weekly charts, too. The December Chicago contract is parked on top of the 39-day descending mean line. This will not be solved before Labor Day. The next couple of days of trade will demonstrate what the trade is thinking. We will be monitoring closely.

Stay tuned.

Market Bullets® Wednesday August 28, 2024 : Close

     StatsCan official estimate for All-Wheat at 34.373 million metric tonnes. The average pre-report estimate was 35.125. Spring wheat official report at 25.351 million tonnes versus avg pre-report guess at 26.6 million. A net price-positive report.  

      France is struggling with quality issues.

      Most European wheat producers have seen a net reduction from last year’s harvest.

      U.S. wheat markets were up. That makes two (2) days in a row!  Chicago returned to its 33-day mean on the expiring September chart. KC Hard Red Winter (HRW), up 12 cents on Wednesday, is working on an “outside week” on the charts (lower low than last week and moving toward a higher close – so far). Minneapolils Hard Red Spring (HRS) gained 9½ cents, putting the lead contract (Dec) right back into the same price range of the last 6 weeks, now seen as “resistance” among the trade. So far this is not enough to declare a trend change.      

 Two more days of August trade heading into the Labor Day weekend. No markets Monday.

Market Bullets® Wednesday August 28, 2024 : Pre-Dawn

     For the money funds, month-end is a payday if profitable short-sold positions are covered, as often rewards are based on gains-per-time-period. It’s housekeeping time. The motivation to hold onto those short-sold positions is still in place, but taking some gains and rotating some positions into deferred months go together nicely as August is completed. KC Hard Red Winter (HRW) in particular has seen spreads move toward inversion as the front months have held value or even increased slightly versus weaker deferred contract prices.

     If the WSJ sez its going down, then the downtrend is over.

     Pre-report trade guesses for Canadian All-Wheat production in Wednesday’s StatsCan report average 35.125 million metric tonnes. Last year’s final was 31.954 million tonnes. The average guess for Canadian spring wheat production is 26.6 million tonnes versus 24.762 last year. The trade will react quickly if their pre-report estimates are off the mark, otherwise it may be an uneventful session.

     Bioceres Crop Solutions Corporation (based in Argentina) has apparently secured USDA approval for U.S. production of “HB4”, a GMO variety of wheat with improved drought tolerance, as well as herbicide resistance. The company has acknowledged that it will take some years before full commercialization is possible for HB4. Bloomberg article <here>.

     Fertilizer prices continue to slide gently lower.

     It is easy to forget that wheat end-users are in very good shape at this point in the price cycle. Demand is likely to expand after the northern hemisphere harvest is completed, with the usual lull in global production before the southern hemisphere cranks up their wheat sales machines. Even with all the global anxiety surrounding wars in the Middle East and the Black Sea region, along with simmering Chinese economic stability issues and their generally aggressive attitude in the Taiwan-Japan corridor, the global economic system is still relatively stable, allowing wheat to move. This is stuff that demand is made of and ultimately a price-positive background factor. The pressure is on us to market appropriately and opportunistically in this environment. All it takes is time and attention.

     The negative wheat trendline won’t change with one up-day. It will require some consolidative behavior with back-filling and testing to build a proper base from which to project the next price objective. They call it the “futures” market because it is always focused on things yet to come. News in-hand is old news. Our best chance for improvements in the bottom line is to be aware of the trend and behave accordingly.

     Labor Day is this coming Monday, September 2nd, with no markets. Friday is the last trading day of August’24, as the September futures contracts head into delivery and expiration. December is now the leading month, followed by March’25.  

This stuff is trackable. Let’s track it!

Market Bullets® Tuesday August 27, 2024 : Pre-Dawn

     Minneapolis Hard Red Spring (HRS) forward spread (Mar’25-Dec’24) has moved to a Life-of-Contract high carrying charge (March delivery is 23 cents above December), an expression of surplus available in Dec versus later delivery contracts, the harvest effect in a normal market. This same spread for Dec’24-Sep’24 is reflecting the same structure with December paying 27 cents more than Sep. It costs about 4 cents per bushel to roll from short Sep/long Dec to short Dec/long Mar.

     Tuesday morning post-midnight trade saw new Life-of-Contract Lows in Chicago December. The other wheat contracts in KC Hard Red Winter (HRW), Minneapolis Hard Red Spring (HRS) and Paris milling wheat are not far behind.  

     The wheat complex trendline is lower. If you go hunting for price-friendly news, there is a noticeable lack. The wild thing is that true long-term lows usually look, smell and taste just like that…something to be avoided (and many do precisely that). Good, solid lows often have a lonely, sour tone. We are almost there. The market is weak and weary, so it’s “Nevermore shall we see the bright sunny slopes of an uptrend.” That is a perfect attitudinal setup for a price chart base from which a change in direction could emerge. This is not a buy signal, or any kind of alarm bell. It is just an observation that lows don’t vary in their tone much. Its always like this, so this is not the time to ignore the study.

     U.S. HRS harvest has crossed the halfway mark.

     There are no major southern hemisphere wheat production regions in serious weather trouble. The Australians are getting enough moisture to grow wheat. Argentina needs rain.

     The Russians are offended that Ukraine has crossed into Russian territory and they (the Russians) are throwing large amounts of explosives at Ukrainian infrastructure, especially electric service equipment. The Israelis have once again demonstrated they can shock the their enemies with pre-emptive strikes. The oil markets have been rising in acknowledgement  of the fact that there is a steadily growing chance for Middle East oil shipping disruptions, but so far there is no real anxiety. Diesel has paused at its 60-day downward-sloped mean line.

     No new all-time highs in gold for five (5) trading sessions…boring!

This stuff is trackable. Let’s Track it!     

Market Bullets® Monday August 26, 2024 : Pre-Dawn

     Friday: KC 1-cent new low. MPLS new low 2½-cents below last week’s 3½-year low. Paris milling wheat September contracts, now the spot price for delivery, is below €200 per metric tonne. Russian wheat continues to easily dominate global export markets.

     Monday early AM: Chicago SRW is flaccid, down about 3 cents and a new life-of-contract (LOC) low in September and December futures contracts. KC HRW is down a nickel and Minneapolis HRS is down 9 cents in the September spot contract, but only 6 in the Dec, making the carry stronger, market-speak for, “sell deferred and store wheat until then.” Paris milling wheat is also negative €3.5 per metric tonne (about a dime per bushel), also a new LOC low.

     The trend is negative, as the bottom edge of the sideways range that ran from mid-July to Aug 22 has been broken. Any planned incremental sales of new crop should be completed as programmed. There is wisdom and thought in that plan. This is what “they” are talking about when you hear about emotions disrupting good trading. We have to be a little cold. Besides, there are ways of re-entering the market if the trend changes and the speculative drive becomes too powerful. Call your merchant. There are ways to improve the bottom line of sales made in this low-price environment, especially when there is a strong carrying charge in the market structure.

     The northern hemisphere harvest is all but completed, as Spring wheat goes into headers farther to the north. The next phase is not a production driven market, but demand. Now the merchandizers get to show their stuff.

     The U.S. Dollar Index is weaker, now trading at its lowest since the last week of 2023. This makes U.S. wheat a bit more competitive in the global trade, but the Russian Ruble is also at its weakest versus the Chinese Yuan since October of 2023 (since May vs the U.S. Dollar). The relationships are changing, mostly due to falling interest rates in the U.S. and due to wartime economics in Russia.

     Gold continues to push toward its all-time high of $2,570.40 per Troy ounce set just last week. Early Monday trade had December delivery gold contracts at $2,560.

     Diesel is on an upward run, looking to challenge its August 13th high.

Rant:   It is becoming clear that the future of a substantial proportion of the global wheat export trade will be dominated by Black Sea origin wheat, especially if Ukraine falls under the dominion of Moscow. Even if Ukraine escapes from the grasping hands of Putin, and all of those tough Russian and Ukrainian farmers are left to their own devices to operate as they see fit, the future amount of wheat for sale from that region will still be the equivalent to a cartel in command virtually year-round. For now the potential of such a massive supply of wheat in the hands of an autocrat like Putin must be recognized, as food and energy (aka starvation and cold winters) are much more effective weapons of socio-economic domination than nuclear missiles could ever be. Just ask the leaders of countries where food riots have led to “regime change” in the past.

Although it seems gloomy, the world is still managed by “comparative advantage”. Our advantages are technology, fertility, efficiency, education, and motivation. We can produce more precisely what the end-user wants, deliver it in good condition more quickly, while adapting to market conditions and improving every aspect of production. It is not government intervention or subsidy that will make this happen, although these things are part of our environment. Look to your leadership. Go to your county Wheat Growers Meetings. It is still the enlightened personal drive to improve, measured in many ways including profitability, which is the beating heart of the U.S. wheat industry. Don’t lose heart!

Stay tuned to this channel. There is more to come!

Market Bullets® Friday August 23, 2024 : Pre-Dawn 

     Friday early wheat trade in Chicago is soft, holding below the low end of the recent 30-day range from mid-July. Minneapolis Hard Red Spring (HRS) was the downside leader, with a minus-14-cent shot, although still holding above the recent range lows. KC Hard Red Winter closed above its daily lows on Thursday, but still was off about 9 cents, also above its recent low boundaries.  

     The rollover to December or later contracts by funds is a short-term price factor as they buy back short-sold September positions and decide whether to sell deferred contracts. This movement was probably already showing up as a shrinking carrying charge (where deferred contracts decline more than nearby - or gain less in a bounce), as shown by the Sep/Dec spread chart from July 19th to August 15th. It went from 25 cents carry to 21 cents in that time. Over the last week it has bounced back up to about 24 cents Dec over Sep. If the funds have mostly completed their roll, then the market is left without a source of buyer support in nearby contracts, while the harvested crop rolls in. It’s a sticky wickie!         

     Paris September milling wheat futures settled at lowest front month price since August of 2021, even as the continuous charts have switched to the December contract. The cash delivery price in Paris is still represented by the expiring September delivery contract. This is relevant to U.S. prices as Paris futures are the largest transparent market in the region at least somewhat affected by Black Sea prices. With U.S. contracts printing new long-term lows below the “failure” line, e.g. the lower boundary of recently sideways ranges, the global markets are speaking to us, “There is plenty of wheat for sale today, come back later”.

     The crop scouts are finding some indications of record corn yield so far.  Some bean pod counts are also higher than last year (sorry to rub sand in the wound).

     China is getting bogged down economically. They are also going to be listening to Fed Chair Powel speak on Friday morning for clues as to potential rate cuts in September. The market has already priced them in!  

     So the trend is negative. The incremental sales should be completed, painful as it seems. There are ways to liberate cash without so much angst. Call your merchant. The bottom line is that this market has not yet found the price that will motivate enough buyers to shore up the price of wheat. Yes, this could be a key low, but its just another low for now, with no sign of a buy signal. Its that old retort: “If you liked it at $5.30, you’re gonna love it at $4.80!   

     One big guess is, “What happens if Russia screws up by flinging tactical nukes, or the crazy Ukrainians find a way to corner Putin and he triggers NATO some other way? What happens to Russian wheat exports? Even a brief interruption of the flow of wheat from the Black Sea would confuse and frighten the global trade for a while. This does not sound like a wheat price negative, but banking on it is not a good marketing plan! At least it is interesting coffee-talk.  And the Israeli-Iranian standstill is not likely to be long-term, but some of Iran’s neighbors are getting irritated and would like the party to be quieter. Kamala who? Watch out, Bubba, here she comes!

     We will see the change in trend when it comes, even if we wake up to a wild headline or two, there is no way to anticipate the lows, nor is there any way but a WAG about when the first real price bounce will come. Relax, enjoy the show!

Stay tuned for more, same time, same channel.

Market Bullets® Thursday August 22, 2024 : Pre-Dawn

     Early Trade Thursday morning was a little, 2-cent bounce following the thumping negative day on Wednesday, as Chicago wheat futures dropped 13 cents on a steady decline through the session on a 45-degree chart angle. The $5.45 low on the new front-month December futures was broken on the close by a cent. That re-set the hopeful 1-2-3 pattern that was grinding its way without any real power. The market is back to sideways with a $5.39 low side tripwire. This microscopic chart dissection is sometimes entertaining, but the reality is that there is no motive to change positions at present. The funds are static, still holding moderately large net short-sold positions.

     The Federal Reserve meeting yielded only a rather calm assessment that the board will “likely” reduce interest rates in September “If” data continues to confirm the position. More information may emerge as Fed Chair Jerome Powell gives a speech Friday morning at the annual symposium of central bankers in Jackson Hole, Wyoming. The Market has already baked in a rate cut, so any announcement deviating from this script would have been thunderous. For wheat traders, the current easing rate market has only to do with a lower opportunity cost of interest for the storage of wheat, along with the weakening effect on the U.S. Dollar; both favorable, but indirect and mild.

     Ukraine has reached the seasonal point where discussions of export caps are normal. Focus is on about 16.2 million metric tonnes as a limit for the marketing year.  

     Global wheat sale movement was quiet on Wednesday, as Tunisia bought 75,000 metric tonnes of soft milling wheat for Sept 15-Oct 20 shipment, most likely of Black Sea origin. S Korea bought 50,000 tonnes of U.S. origin wheat of various classes, including soft white.

     This wheat market is stable, so it is easy to become less than attentive to the daily grind of no-news. Its  understandable, but not the best. It is also easy to keep up with any changes, not just in the wheat trade, but also with global market tone. It really only take a few minutes per day. Stay tuned to this channel. We will see the change when (and not if) it comes and bring it to you.

Market Bullets® Wednesday August 21, 2024 : Pre-Dawn

     Wheat market-oriented news items have become redundant or incremental. The “Information Space” is dominated by U.S. politics, Ukrainian military movements and Iranian/Israeli/Hamas actions. The price chart for Chicago September futures show a grinding low at the end of July, a following nominal high in the 2nd week of August, and what now appears to be an attempt to identify a slightly higher low in the last week. The entire period has lacked enthusiasm for either direction, but will complete a reversal pattern if there is a breakout above $5.52 on the September, which is the equivalent of a break above $5.75 on the  December contract as the September expires soon. Any trading below $5.45 Sep will re-set the entire thickety structure. (Write that down).

     The markets will not shut down due to lack of interest. In due time we will have a factor that has the horsepower to change the tone. Meanwhile, it is essential that we observe Putin’s response to the Ukrainian excursion into Russian territory. There is no off-ramp for Putin, which makes him dangerous. This is not a wheat market factor unless there is a large expansion in the story about two of the largest wheat export sources in the world, but markets do not like such uncertainty, which can make prices wobbly. The same goes for the end-game in Israel. Netanyahu is under tremendous pressure by the global community to make a deal with Hamas. This is not a direct wheat factor, but a period of less stress for global merchants would be price positive.

     The wheat price trend is shifting toward the positive slope, but only if you squint hard and look at it from across the room. The change when it comes will show up on the charts first. It makes sense to keep watching.

Stay cool, stay tuned.   

Market Bullets® Tuesday August 20, 2024 : Pre-Dawn

     Tuesday very early AM trade showed invisible volume and a small price range for the session to that point. The wheat complex lacks a driving factor. It’s quiet…too quiet, like one of those hot mid-summer nights where there is no air moving and even the crickets are trying to sleep.

     News is very light, with odds and ends like;

     This is the 3rd week of incremental fertilizer price declines. Natural gas, representing 60%-70% of the cost of production of nitrous ammonia, had been rising slightly based on an August storage drawdown, but then in the last week flattened out. The main seasonal drivers for Nat Gas are weather-related, so it’s a bit early to anticipate the heating season.

     Germany’s farm co-op association released a lower wheat crop production estimate with a 7% drop from their last estimate.

     U.S. wheat exports as of August 17 for this marketing year stand at 4.584 million metric tonnes, about 26% ahead of last year’s pace.

     The Egyptian supply minister is calling for the global wheat market to offer better terms, because they are the largest wheat importer in the world market. This seems a little whiney, and probably won’t result in any big discounts. This is a good customer reminding the sellers that they are a good customer.  

     The flat-to-negative trend for wheat prices is not surprising anyone at the moment. The energy level of the trade is low, allowing small headlines to look larger. The change will come, so let’s stay awake.

     Noticeables: Diesel has produced a new daily low on August 20 dating back to May of 2023. Gold is pushing out new daily highs again, and has now produced a $485+ per Troy ounce year-to-date gain into all-time highs. It’s a warning light flashing. The U.S. Dollar Index is at a 7-month low on easing interest rate expectations. The Russian Ruble is weaker against  the Yuan and the Dollar.  

Stay tuned, Stay awake.  

Market Bullets® Monday August 19, 2024 : Pre-Dawn

      Monday morning trade in the small hours is showing weakness in Chicago wheat futures, down 3 cents. KC down 2 and Minneapolis HRS down 3-4. Volume is light.     

      Northern hemisphere wheat harvest is roaring into its final weeks. FranceAgriMer released a one-point decline in French soft wheat ratings this week, now 48% good-to-excellent versus 76% last year at this time, which is all but irrelevant, as the crop is 98% harvested.

     Ukraine reports the 2024 wheat harvest finished at 21.7 million metric tonnes, versus 21.6 million tonnes in 2023.

     “Big crops get bigger”. Corn and Soybean crop tour estimates due out this week, August 19 - 22, 2024

     The Russian wheat export tax is increased 9% for the August 21-27 period. This is an “automated” tax calculation that is routinely manipulated according to market conditions and the status of wheat supplies available for sale from Russian origins.

     “WEAT” is an “Exchange Traded Fund” operated by Teucrium. It may be taken that one share of WEAT represents one bushel of Chicago Soft Red Winter (SRW) wheat futures. If interested by this idea, please go to the Teucrium website and learn how grain futures ETFs function, what the pitfalls and advantages are. This is not for everyone, but it is liquid and easy to trade in any stock brokerage account. There is no minimum number of shares that must be traded at most reputable brokers.

     The U.S. wheat price trend is flat to negative. There will be some technical “corrections” to follow the current period of consolidation and chart base-building that may provide some opportunities for decision making, but it will require more power than what is showing on the screens this morning to move the price significantly lower or higher. A break in either direction, above $5.92 on the high side and below $5.14 on the low, could easily produce a 50-cent run…or not. At least there will be trade interest enough to jump on the break. Since we are marketing and not scalping the market, we will wait for trend-change definition before pulling the trigger on sales or price coverage strategies.

     Noticeables: Gold has printed yet another all-time high on Early Monday AM trade in its December futures delivery contract. Diesel continue to show weak price pattern. The Russian Ruble is weakening versus the Chinese Yuan (now the official benchmark exchange currency for the Ruble). 2-Year T-Notes are showing lower interest rate trend for the last week of trade.  

It's trackable…most of the time…so let’s track it!  

Market Bullets® Friday August 16, 2024 : Weekly Closing Update

(Revised* Sunday PM) *Tuesday is rollover day for our Trade Navigator Front Month Continuous Chicago wheat futures charts, moving from September to December delivery contracts, reflecting a jump of approximately 21 cents per bushel based on the storage and interest from September delivery thru December delivery. This means that if you had a short-sold hedge in September contracts and wished to keep the coverage, you would buy Sep and sell Dec, with the 21-cent spread reflecting the market’s consideration of the value of holding wheat in storage into December. This is known as a “normal” market.  

     KC charts rolled-over into Dec as of Friday’s close. The (subject to change) carry spread today is about 15 cents into December. The Minneapolis HRS Sep/Dec spread is 15-16 cents will show on *Tuesday’s charts.

     This “rollover day” is a mostly arbitrary date, in this case set by a specific chart service, intended to allow large traders enough liquidity in expiring futures contracts to do the shift into deferred months without difficulty. For small traders it is not normally a big problem to accomplish a roll right up until the last business day of the month before delivery, in this case the last business day of August heading into the expiring September’s delivery period, during which liquidity (tradability) and delivery against your account (if you are holding a long-bought contract) are potential issues.

     Paris Milling Wheat has printed a new low dating back to march 11 2024. This in spite of ratcheting war risk on the Black Sea. Russian and Ukrainian wheat sales are driven by a desperate need for foreign exchange credits.

     Diesel settled Friday, August 16 directly on both the 560-session and 237-session geometric mean lines. Both descending from previous high points. This reversion to the mean is a common feature of well- established trends of long duration. Diesel is above its early August lows.

     Gold produced a new all-time high price of $2,538.30 per Troy ounce in the December delivery contract. It seems that the small investor is not following gold very closely. It is apparently the sovereign banks of countries outside the U.S. that are originating many of the orders. Perhaps they are not interested in owning any currency that is so influenced by politicians. The current “Real” interest rate in the U.S. is a nominal negative), that is the 90-day T-Bill interest rate is less than the rate of inflation, making the U.S. dollar less attractive and gold more attractive in global markets for purposes of holding reserves.

     It's becoming clear that there is a potential monster corn and soybean crop coming in the northern hemisphere this fall. That is not a direct threat to wheat prices, but it is a very big shadow in the background, maybe enough to prevent wheat from gaining anything more than dimes and nickels for quite a spell. If this continues, the marketing of wheat at a profit is going to take work, which is to say time and attention to detail. This calls for “skull sweat”. We may have a big black swan come down to pick us up and carry us, but that is not a good marketing plan! Call your merchant and become familiar with pricing mechanisms that allow price protection and other strategies to fine-tune wheat sales.

     The trend for wheat is flat. All of the major wheat futures contracts are very near to multi-year lows, but they have been so for several weeks. Without a stimulus greater than mundane adjustments to government statistics or minor harvest delays, we will go on waiting, watching the dollar value, interest rates and other global canaries for macroeconomic indicators, and of course, war in the Middle East or Ukraine. When the change comes (and it will come eventually) it will show in the charts first. We just have to be looking to be aware.

     Meanwhile, stay tuned for anything interesting.

Market Bullets® Thursday August 15, 2024 : Pre-Dawn

     Very early Thursday morning wheat trade in Chicago is seeing a bit of positive, up 8¾. KC Hard Red Winter (HRW) and Minneapolis Hard Red Spring (HRS) are also positive 6-8 cents.   

     Paris milling wheat futures are at new lows dating back to March 2024, as Russian wheat export taxes are low, Russian Ruble is weak and French wheat struggles with quality issues.

     Ukrainian wheat exports are up substantially from last year at this time, but a major Black Sea export terminal elevator owned by Lous Dreyfus in the Ukrainian port of Odesa was damaged by a Russian missile Wednesday. The surprise invasion of Russian territory by Ukrainian forces is causing a re-calibration of what was a static war. The wheat and corn markets will both be checking on this factor in the weeks ahead.

     Corn and Soybeans have paused Wednesday into early trade Thursday after midnight. Not a trend change yet.

     Global international bulk freight rates are easing for Atlantic routes due to supply of available shipping capacity.   

     The wheat price charts are showing a gentle rise back above the 24-trading session mean, about the center of a 78-cent range, with a short-term upside target at $5.56, 15 cents above current trade. This kind of micro-trend management is not much more than entertainment while waiting for a better trend to develop. A slow-to-develop sideways base on the chart pattern is healthy. The longer it is, the more significant a departure from the range will be.

     Stay on this channel, eventually we will see more interesting developments.

Market Bullets® Wednesday August 14, 2024 : Pre-Dawn

            The first tranche of the recent, massive 3.8 million metric tonne tender deal(s) made by Egypt’s General Authority of Supply Commodities (GASC) has appeared as a booking of 280,000 tonnes of milling wheat, 180k metric tonnes from Ukraine and 1010k from Bulgaria, at $241.98 per tonne FOB and $266.21 per tonne CFR on average, per GASC announcement.

If you are going to claim interest in what is happening in the wheat market, you had better be paying attention to what the Russians are doing…

As of August 13th, the Russian central bank’s official exchange rate is about 7% weaker than it was the day Ukrainian units began to enter Kursk, a Russian border oblast on a line northeast of Kyiv. The last time the Ruble traded at this level was May 23rd.

Regular Russian Ruble trading in non-Ruble currencies has been established in the over-the-counter (OTC) market after July 12, when sanctions were imposed on the Moscow Exchange (MOEX) and the Russian “National Clearing Centre”, an agency of MOEX. At the same time, Russia set up the Chinese Yuan/Ruble cross as its official benchmark.

MOEX provides a futures contract on the Ruble/Dollar rate which is used along with open OTR quotes by the Bank of Russia (BoR) to set a benchmark for their official Ruble/Dollar exchange rate. All of this system is cumbersome and expensive, which was the intention of the sanctions.

The immediate effect of a weaker Ruble on wheat prices is to make Russian wheat cheaper in global markets. It is still too early to take this short-term decline in the Ruble as an indicator of instability in Russian economics, but it is a warning light flashing.  

Corn and Soybeans are both drilling down hard into 4-year lows. Optimistic yield projections and a lack of import buyer enthusiasm… The funds are still heavily net short in both markets. When the rally comes it will be interesting, but from what level to begin? For wheat prices, this is a little like driving with the brakes on.

The wheat price charts have not yet produced a “failure” of the sideways channel lows, but the distance from this morning’s trade and those targets is shrinking. In the very early AM trade for Wednesday, August 14th, Chicago is working within 15 cents of the September contract low at $5.14¼, which is the lowest front month trade since August, 2020. KC Hard Red Winter (HRW) is also about to test its long-term lows. Minneapolis Hard Red Spring (HRS) is a little better looking, but in the same low-end challenging pattern. If making an incremental sale, need to raise some cash and looking for a trigger, a break of any of these lows on a closing basis is as good as it gets right now. If considering buying a call option to replace sold wheat, remember that buying a thing because it is cheap does not mean it will not get cheaper. We always like to have an actual trend change pattern in our favor.

Stay tuned, there are some factors emerging.  

NOTICEABLES: Watching the Russian Ruble vs the Chinese Yuan. The Ruble is weakenting. Also watching Gold, nearing the all-time highs once again. Diesel is on an upward run, maybe a case of war nerves.

This stuff is trackable. Let’s track it!

Market Bullets® Tuesday August 13, 2024 : Pre-Dawn

WASDE report:

* USDA’s All-wheat production was reduced 26 million bushels to 1.982 billion bushels versus the average pre-report guess of 2.014 billion bushels. – Price supportive.

* Winter wheat production increased 20 million bushels from last month to 1.361 billion bushels.

* Other Spring Wheat production fell 34 million bushels to 544 million versus pre-report ideas at 579 million – Price supportive.

* Durum production totaled 77 million bushels down 12 million bushels from last month and below the range of estimates of 80-95 million bushels – Price supportive.  

* U.S. 2024/25 ending wheat stocks reported at 828 million bushels, down 28 million from last month, and below pre-report ideas at 861 million bushels – Price supportive.

* World ending stocks totaled 256.6 million metric tonnes, slightly lower than last month’s 257.2 Million tonnes and 400,000 tonnes below the average estimate – Price supportive.

* Global Production of wheat is projected to increase 3.5 million tons to 1,060.6 million primarily on larger production for Ukraine, Kazakhstan, and Australia that outweighs lower production for the EU and the United States. – Price neutral to negative.

* Weekly 6-state spring wheat conditions were down 2% from last week at 72% good/excellent. Washington shows the weakest spring wheat crop at 17% Good-to-Excellent. Idaho spring wheat condition rated 63% Good-to Excellent.

* Spring wheat harvest is 21% completed, with Washington at 32% and Idaho at 17%

     The WASDE report did not provide any upward steam for wheat, despite the advance trade guesses being mostly too heavy. The buyers are just not satisfied with a few production number adjustments. They want a larger, more pervasive factor that has not yet emerged. The trend for wheat prices is not inspiring for the anxious seller of newly harvested wheat. Russia is reflecting this attitude with reduced export taxes on wheat, as they continue to dominate the global trade (Imagine a Russia that also controls the Ukraine’s rich wheat ground – too OPEC’ish for my taste…) So we wait. The range boundaries remain as alerts for the next price leg, upward or down.

     Meanwhile, for HTA’s and some other strategies, the carry is pretty good in Chicago, at 23 cents or so in the September thru December spread, and 19 cents from Dec thru March. KC is weaker, at 14 between Sep and Dec, and Minneapolis is at 19 Sep-Dec. The September contracts are about to be rolled into later months by the trade, so the deferred spread will be catching more volume. Call your merchant for details on these and how to use them to enhance an otherwise moribund wheat price.  

     Tighten up the marketing plan. This is a year when thoughtful and deliberate wheat marketing efforts will pay back the time expended.

Market Bullets® Monday August 12, 2024 : Pre-Dawn

     Rolling out of September to December futures: The Weekly and Month-to-Date Summary Table (above) now reflects the quotes for delivery months for each market according to trade preferences. Currently the wheat quotes all are for September delivery contracts, including the PNW cash quote reflected on the Weekly Chicago SRW chart. On August 15-19, all of the “front month continuous” wheat futures charts will roll to December quotes. The PNW cash quote will remain on September.

     Monday morning World Ag Supply/Demand Estimates (WASDE) report due out at 9:00 AM Pacific Time/11:00 Central. Pre-report aggregate trade guesses show:

*The average All-Wheat production guess at 2.014 billion bushels versus 2.008 billion in the July report. *Other spring wheat production is seen at 579 million bushels versus 578 million July.

*U.S. All Wheat ending stocks are projected to come out at 861 million bushels for 2024/25 vs. 856 million in July. 

There is always the potential for surprises, but the August data release is rarely exciting for wheat. If the trade guesses are close, the market will likely pause to review and then move on shortly after. The trade is much more focused on corn and soybeans at this juncture.

     The most recent CFTC Commitment of Traders (COT) Report says the funds remain net-short-sold significant wheat futures positions, but have slightly reduced their positions over the last week. This is still a storage of buyer energy that will eventually get triggered, but it will take something more than what is on the wires at midnight Monday morning.

     An excellent roundup of current supply price factors produced by Cory Christensen at Northwest Grain Growers on Friday morning: 

“-US wheat production rebounded significantly this year.

-Canadian volumes expected to be near record.

-EU crop down significantly due to excessive rains. Sizeable carryover from last year keeping markets tame. [Some northern France elevators are unable to accept wheat deliveries, as they are full.]

-RUS winter wheat crop shrunk considerably after extreme dryness, but a rebound in spring wheat areas brought crop to more of a trendline average.

-UKR crop is smaller, but not beyond what they can still handle and ship.

-Turkey & Pakistan recorded a massive wheat crop and banned imports.

-India was thought to be an importer of wheat this year given some production woes, but the story died out a few months ago after no action was seen.

-Australia's crop in pretty good shape and expected to be about 29MMT, or the 5th largest on record (very early though)

-Argentina's crop has frost warnings happening for next week and is in a state of mildly uncomfortable dryness.

-China...who knows what China's crop is. They've been buying AUS wheat for a while and little bits from the US and Canada, but not in quantities to suggest they're in any sort of trouble.” – Thanks, Cory!

     The Chicago September wheat futures delivery chart has been floating sideways in a 40-cent range since mid-July, not a care in the world. Plenty of wheat for sale, buyers lined up, all patient and willing to pay. Taking wheat, copper, interest rates, currency markets, energy prices, etc., anxiety is certainly present, but not unmanageable.

     The Chicago downward move tripwire alarm is a trade below $5.14 in the September, or $5.39 in the December futures. On the upper side of the narrow sideways channel we have been following, the upward move alarm is above $5.56 in September contracts, or $5.81 in the Dec. These are nominal ideas of price levels that have proven to be boundaries for the recent range, and are intended only as alerts for marketers interested in following the wheat market’s behavior. We at MarketBullets, LLC are providing them as examples only. The application of this information is not intended as trading advice, and as such we do not accept any responsibility for its use.  

     Rant: The politicians are behaving like they are on the pro-wrestling circuit, flinging chairs and bellowing, with exaggerated heroes versus wildly melodramatic villains. The fault is not with the candidates. They are merely delivering what the fans came to hear and see. Most of what is on display is a distraction from reality. The poisonous, foolish hyperbole that is the staple of each day’s political wailing and gnashing of teeth is overplayed. Our country is running on half-power, with those who benefit from division and emotional turmoil the only winners. I tell the kids, “If you find that what you are reading, viewing or hearing is generating anxiety, anger or depression, you are being manipulated! If it seems too horrible to be real, or too good to be true, it is of no value, and should not be repeated. Make no assumptions about what is true or false. The greatest lies are always mixed with some truth. If you cannot honestly verify what you encounter, disregard whatever is being put on you. You know who to consult! Then listen to your own quiet voice of reason, as you think for yourself.”   

MarketBullets® Friday August 9, 2024 : Pre-Dawn

     The August World Ad Supply Demand Estimates (WASDE) is due out on Monday morning August 12th at 9:00 AM Pacific Daylight Time/11:00 Central. Early pre-report trade ideas show expectations for a modest increase over last month’s wheat ending stocks figure of 856 million bushels, up just 3 million (+.35%) to 359. The market reaction to these reports is mostly quick calibration adjustments based on the accuracy of the pre-report guesses. Unless there is a surprise exceeding the range of those guesses, the report will pass quietly.  

     The French wheat crop is now estimated at 25.6 million metric tonnes, the lowest since 1986. France is normally the largest wheat producing member of the European Union at about 35% of the total, followed by Germany around 20%.  

     USDA’s weekly report shows net U.S. wheat sales of 274,000 metric tons (MT) for 2024/2025, down 4% from last week and 23% below the prior 4-week average, still ahead of last year’s pace by a respectable 34%.

The Russian Ruble is reflecting short-term weakness, as inflation is increasing in Moscow. This could partly be a result of late observations of Ukrainian incursions into Russian territory. The longer-term trendline is toward very gradual Ruble strengthening. This bears watching.

     In a disturbing article from Arlan Suderman at StoneX: “We currently spend an estimated $1.797 trillion on Medicare / Medicaid, $1.461 trillion on Social Security, $915 billion on Defense, and $913 billion on servicing our debt each year. Combined, that totals $5.086 trillion on these non-discretionary budget items, which exceeds annual tax revenues of $4.981 trillion. So, we’re already at an annual deficit, and we haven’t even paid yet for Homeland Security, or the multiple discretionary funding programs, such as farm programs, food programs, education programs, etc. The money that we used to spend on the discretionary programs is now going toward servicing our debt, so that we must borrow money to sustain these other programs.” Click <here> for the whole piece. Makes me wonder who is driving this bus?

      The wheat market chart pattern is vigorously doing nothing, but the longer this pattern lasts, the more useful it becomes. Friday early morning trade is up about 6-8 cents, but still at or below Tuesday/Wednesday highs, and still 10-15 cents below the price level that would trigger market attention. We are watching Chicago September contracts at $5.56 as a “tripwire”. The big speculative funds that are still holding relatively heavy short positions see no present motivational technical or fundamental factors to cause significant position changes. The world is well aware of that the weather risk leading to wheat crop shrink in the northern hemisphere is past its peak and will be narrowing every day from here to the end of wheat harvest. The coffee-talk is drifting toward Ukrainian incursions into Russian territory, or what Iran’s retaliation for damage to the guest quarters at the Tehran government guesthouse will be. There is a temptation to buy wheat here, and the risk is obviously lower than it was a month ago, but it would still not be in harmony with the trend. Prudence says, “Look for the breakout, it’s only a few cents away, and even then be ready to back off.”

This is a trackable thing. Let’s track it!     

MarketBullets® Thursday August 8, 2024 : Pre-Dawn

     Apparently Egypt thinks this is a reasonable time and price to buy ahead, in view of their extra-large tender for 3.8 million tonnes (or so) of wheat this week. The deal will cover an October to April shipment period, with payments along similar (270-day) lines, extended far beyond their normal 4-5 month practice. The financing arrangements are likely to be an important feature of the purchase. Russia is expected to dominate the business. Intuitively it seems like it would be attractive to Mr. Putin.

      Heading into Thursday’s session in the very early hours, Chicago September was up a couple of cents, trading quietly. The price range of the session was entirely within the previous day’s action. KC Hard Red Winter (HRW) was also up 1-3 cents as was Minneapolis Hard Red Spring (HRS).

     The trend is still inside of a downward sloping channel, but with no new lows since July 29th  setting up a sideways pattern that may allow a rise to develop. A useful tripwire price for a short-term price bounce would be a close above $5.49 in Chicago’s September contract. On the downside, a trade below $5.14 would likely attract seller’s attention. Anything inside of these boundaries would be inconsequential.

Stay tuned, as the trade is tuned.

MarketBullets® Wednesday August 7, 2024 : Pre-Dawn

     The French soft wheat harvest will struggle to meet milling quality standards for protein. Soft wheat harvest is expected to accumulate to 25.2 million metric tonnes for 2024/25, some 27% below their 5-year average and lowest in several decades. See <Paris Milling Wheat> price chart. On average, France produces about 27% of the wheat produced in the EU.

     The 6-state U.S. Hard Red Spring (HRS) crop condition as of August 4th held steady at 74% Good-to-Excellent (GEx), the best overall HRS condition as of this week since 2018. Washington State has seen a hard decline in HRS crop condition, now at only 16% GEx, crowding the “Fair” category at 65%. ID is far better at 69% GEx. 10% of the HRS crop had been harvested as of the 4th.

     Egypt, always an aggressive global wheat buyer has issued a 3.8 million metric tonne tender this week, to be shipped over several months forward.    

     The Canadian spring wheat crop is shrinking from hot and dry conditions. While this is no surprise to the market, it is an ongoing bit of pressure that is part of the reason for wheat prices to be testing the upper technical boundaries of recent trade.

     Australian wheat is receiving enough regional moisture to push crop forecasts to 39 million metric tonnes, up from 25 million.     

     The Chicago wheat futures as bellwether continues to display that “toe-dipping” pattern, with intra-day lows well below its closing settlements. The September contract has clawed its way back up to the July 25th price range, 10 sessions ago. The imminent upside challenge point is the high of July 19th at $5.56¼, which is also the low of June 26th the bottom of the air-pocket 20-session collapse that started on May 28th, an inflection point that was re-visited on July 10th. So, to summarize, there is a technical challenge about a dime above Wednesday’s early morning trading range that could trigger some short-covering among the trading funds. The reaction of the big specs will depend at least partly on how vigorous any breakout of that level might be.

     The three  (four if we count Paris) major futures contracts are all setting up some narrow trading range bases. We will have a chance to measure the next phase of price movement by either a breakout upward or a failure of the range lows, now about 30 cents below current trade.

     We are engaged in wheat markets that are not being driven by fluctuations in large, powerful fundamental factors. Wheat price movements are being measured in smaller price increments, with less than 50-cent moves in either direction as the mode. This is probably going to be the environment with which we must live for the duration of northern hemisphere harvest into a brief pause and then the southern hemisphere crop offtake. Marketing for the balance of the calendar year will require more deliberate and calculated goals, as trends become more fragmented and unreliable.

     The now two-plus year-old wheat negative price trend has paused in its 8-dollar per bushel slide, and is now under review. It is reasonable to observe the short-term market moves to gauge tone and intensity.  

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday August 6, 2024 : Pre-Dawn

     Chicago wheat September futures entered the Monday daylight trading hours with minus 20 cents and a dismal attitude, but shortly after 5:24 AM PDT the price began to rise and never looked back until the close at plus 1½ cents for the day, a full 20 cents above the lows. This makes a skinny candle on the charts that we like to call a “toe-dip” pattern, where the market tests some low price level and recoils quickly. The week ending last Friday displayed at least 3 of these daily session patterns, suggesting that every time the price reached toward the lows, there were buyers discovered within 3 cents of the 4-year lows.

     Tuesday’s early morning trade is holding the Chicago September delivery contract about 3-4 cents below Monday’s closing settlement. KC off about 4, and Minnepolis HRS down less than a cent in the September, but minus 3½ to 5½ in the deferred delivery slots, reducing the carry into December and beyond, a suggestion of rising nearby demand compared to later demand.  

     The big trading funds are still holding heavy (if not record) in grains. These money-movers are alert to anything that threatens already profitable trades. One thing that can trigger them to cover those shorts is a “death by a thousand cuts” kind of price pattern, which we are seeing now. That event would be more like “How high is the water, Mama? The decision to move takes time.

     If there is an emerging factor right now, it is quality/protein. Bigger than average crops in the high protein country usually average lower protein, and there is definitely moisture trouble in some parts of paradise. This is usually not a direct price mover, but it can skew the high-grade wheat supply distribution and make the end-users bid up for the good stuff if it gets serious enough.

     The futures trend for wheat is under construction, with a sideways coiling pattern that will be the measuring point either way, once the driving factors settle who will lead, up or down. The price trail is likely to be long and winding from this point, unless a black swan (war?) lands on the pond. Marketing plans end up being the saving factor here, where there is coverage against downside risk for unsold wheat, a thoughtful sales plan, with maybe designated incremental sales with a matching criteria for execution(s), and consideration of risk. There is always a way to speculate, almost irresistible. So scratch that itch, but find a way to do it that does not have big trap doors under the path. In our experience, those traps will take your cash out of your pockets much faster than the profit rolls in.

Stay tuned here for more information. Good hunting!

MarketBullets® Monday August 5, 2024 : Pre-Dawn

     Wheat is starting off the 2nd week of August 2024 in a slumping pose, with Chicago erasing last week’s gain, KC down a dime and Minneapolis HRS off 3½ cents.  

     The only wire items in play are oriented toward the next few steps expected from Iran and Co, as they telegraph a coordinated attack on Israel and possibly some U.S. military assets in the region. The Secretary of Defense has ordered additional Naval ships equipped with missile interceptors. More air cover in the form of F22 jets are also moving to the region. While the emerging conflict is gaining definition and strength, the direct effect on wheat prices has been minimal to date, but markets do not like uncertainty and wheat is no exception. The world is drawing in a big breath. Decisions are going on hold. We need to see how far Iran is willing to go.

     The wheat price charts have just a little lift remaining from recent weeks, but the character of the price pattern shows weakness. Urgency is not part of the mix at the moment. Steady.

     We are watching several futures contracts for signs of distress or denial. Interest rates, gold, copper, diesel, and currency values are decent indicators of global market stability. See links in the paragraph from Friday.

     Stay tuned. There is always more.

MarketBullets® Friday August 2, 2024 : Close and Weekly Summary

     The U.S. Dollar Index is at its lowest since March, largely reflecting lower interest rates and an anticipated Fed rate cut pending. The top statistic is higher unemployment. A mild wheat export price positive.

     2-year Treasury Notes closed the week at the lowest interest rate yield (3.875%) since the first week of April 2023. The highest recent rate traded was in April of ’24 at 4.993%.  At this point the market is the prime mover and not the Federal Reserve Committee. Lower rates make wheat storage costs less.

     Diesel futures closed the week at its lowest daily closing settlement since June 5th this year, which was itself within a few cents of the lowest NY Harbor wholesale price for diesel since May of 2023. The price pattern has reached and exceeded the long-standing 78.6% downside ratio target. This may be taken as good news for diesel users, but it may also be taken along with falling interest rates as an economic indicator of a slowdown. We are also watching the Copper futures contract which is often a decent indicator of global economic health, as copper is so elemental to so may manufacturing and construction businesses.

     Another new all-time high in the Gold December delivery contract at $2,522.50 per Troy ounce. Threats of war and pending economic slowdown plus sticky inflation (lower domestic value for U.S. Dollar as well as a fading global dollar price). There are rumored to be some large central government banks buying gold. All of this is heady talk for a wheat trader, but the background has to be carefully painted into the picture to have the small stuff make more sense.

     Wheat finished the week in Chicago up 15 cents, although it did not feel that way in the gut. The September futures contract has done only the very basic base-building behavior so far. There is scant argument for buying wheat, and the emotional approach has not paid well over time, leaving us with a extension of the patience test. The trend is still lower, defined by a nominal new long-term low, although without “vigorosity”, as the week turned green as it wore on. At least it is still alive.

     KC Hard Red Winter (HRW) wheat harvest is very nearly complete, and the price at the Kansas City Board of Trade is working on a base very similar to Chicago; a new long-term low followed by a 16¾-cent positive weekly close. The odds of a follow-thru on Monday seem reasonable.

     Minneapolis Hard Red Spring (HRS) printed a new long-term low two weeks ago, and then successfully tested that low in the week just ended, a little more advanced base than the other two major U.S. futures contracts. All of these patterns will need work in coming weeks. Meanwhile, the best we can do is “hide and watch” as Cousin Terry used to say.

MarketBullets® Friday August 2, 2024 : Pre-Dawn

     The market’s eye is fixed on the base-building pattern that is being established in Chicago September futures. KC is also working on a measuring point low. Minneapolis Hard Red Spring (HRS) has larger swings, but is in the same process. The series of lower highs followed by lower lows over the weeks since the late May high-point of $7.67 ($1.79 above current trade in HRS) is the classic definition of a down trend. The opposite pattern takes time to generate.  First step is a significant low…followed by another low just above that signature low. So far, HRS has fulfilled these two steps. Any trade below that first long-term low is a re-set. KC has only a single low to its name, and cannot yet apply for change in trend direction. Chicago is in the same category, so its HRS in the lead by a nose, but no clear change is yet to be seen.

     Ukraine wheat exports continue to decline, partly due to hot and dry conditions on maturing wheat, and partly on difficult farming conditions due to lack of fuel, parts and personnel.

     Conditions for maturing spring wheat in the northern tier of states and Canada are still good. Moisture is in the forecast.

     Conditions for U.S. corn and soybeans are also good.

     Wheat has been grinding sideways for the last week, poking at the long-term lows without enthusiasm. The market tone is subdued, and coffee-talk subjects have been thin and repetitive on steady volume. This kind of market lets option prices shrink. Corn and soybean price patterns are very similar, close to long-term lows with a lack of conviction.

     The orthodox definition of the price movement is still a negative slope. Stay on marketing plan, including any planned incremental sales on schedule. Use the option strategies. Call your merchant for help with these. Make them explain and repeat every aspect of the most appropriate contract(s) until you are intuitive with it. Its ok to repeat. Even they have to think deliberately about this stuff to prevent errors, and they want you to be confident about your decisions.

     Meanwhile, watch the pattern and market noise level for changes in the wind.

Stay tuned.    

MarketBullets® Thursday August 1, 2024 : Pre-Dawn

     FOMC left its target Fed Funds rate unchanged but indicated the possibility for a rate cut at the September meeting.

     New all-time high for Gold December delivery contracts at 2,502.80 per Troy ounce on August 1, 2024.

     There is a general slow trend toward wider overt conflict in the Israel/Iran/Lebanon/Syria region, triggered by the recent reaching out and tapping Hezbollah and Hamas leadership by Israel. The potential disruption in global grain markets due to regional war in the Middle East has greater implications for crude oil and for customers who buy wheat from Russia, but it could be part of a trigger for short-covering. There are many innocents in harm’s way, all of them good, wheat consuming folk. In the long run not healthy for markets.

     The corn chart is really nasty, with a 3-year+ decline from $8.00 to $4.00 not showing any tendency to base. The global price of corn as a factor in the price of wheat is correlated. Any further erosion in corn prices will at least have a dampening effect on wheat. The psych magic number is $4.00 per bushel for corn, under challenge as this is written. The low in 2020 was $3.14.

     The trendline for wheat is not showing any strength. A sideways base, maybe. It will take something large to trigger a move above the first target at about $7.20 in the front month of Chicago Soft Red Winter (SRW) futures. The first ratio target on the upside is just above $8.00. These targets require $1.50 or more for the “low hanging” fruit, and at least $2.70 for the tough one (a 38% retracement of the entire decline from the spring of 2022 highs provided by Mr. Putin). This kind of review is always crazy-looking, but these markets are capable of some crazy stuff…

     Don’t let the charts mislead! Incremental, boring, disappointing sales all along the way still beat the “hold on for higher prices” strategy over the long road. There are strategies that can help liberate cash and hold onto upside potential without some of the costs. Call your merchant.

Stay tuned. At least its not boring!      

NOTICEABLES:

     Gold as an economic indicator printed new all-time highs in early trade Wednesday, July 17th. This is usually a fear-based trade, especially in light of American political events and a jockeying for global positioning. Even Putin is holding his cards tightly ahead of this fall’s events.

     The US Dollar Index is very steady, sitting right on top of the central indicator of a flat, 20-month-old range sideways. Interest rates are easing downward in the 2-year Treasury Notes.

     Diesel prices have created a “head and shoulders” pattern and have broken below the “Neckline” of said pattern, pointing to a short-term target about a dime per gallon lower. This kind of thing sometimes takes quite a while to appear at the pump, but the trend is satisfying to see.

     Natural gas prices are reflecting no buying pressure, and are trading just above an often-validated price low zone.

     The market hive seems calm for the moment, even with hot-spots and political rhetoric running in high gear. If we are diligent, we will notice oddities that may give clues of a shift in pattern.

Stay tuned, there’s more to come…

MarketBullets® Wednesday July 31, 2024 : Close

No changes in wheat trend. The daily high/low range for Wednesday put in highs and lows outside of Tuesday’s trade, but opened and closed well within Tuesday’s range. Chicago Soft Red Winter (SRW) is dragging on the bottom of the stream, while KC Hard Red Winter (HRW) is closing consistently above its lowest close, and Minneapolis Hard Red Spring (HRS) is technically stronger on the charts, having not produced a new low since July 17. This is intuitively what a consolidation low should look like. This is not a buy signal, but is an essential pre-cursor pattern in the process of creating a base from which to measure price strength later. Patience, Precious!

New all-time high in December gold delivery contracts at $2,496.60 per Troy ounce.

Diesel prices jumped up to $2.45/gallon wholesale delivery to NY Harbor from $2.37/gallon two days ago.

2-year Treasury Interest rates are trending slightly downward, now at rates similar to those of early Feb’24.

Russian Ruble is stronger in global markets than it has been since late June, a mildly price-positive factor for wheat exports from Russia.

MarketBullets® Wednesday July 31, 2024 : Pre-Dawn

     Tuesday’s entire trading range in Chicago was within Monday’s range. Wednesday’s Pre-Dawn price range as of 1:00 AM PDT was within Tuesday's daily range. Volume of trade is declining slightly. All of this is characteristic of a market without conviction.

     Month-end is usually a point at which we see a bit of trading fund position adjustment, in the case some short-covering to pin some profits to the books. It has been quiet, reflecting no motivation among the big specs to take money off the table.  

     Minneapolis Hard Red Spring wheat futures hit a low on Tuesday just one cent above its 2-week old

     Lots of small global wheat tenders. European Union statistics show soft wheat exports in the first month of their new marketing year at 1.85 million metric tonnes, down1.14 million tonnes (about 38%) from last  year’s same week 2.99 million tonnes.

     Global fertilizer prices have been sliding lower since late June.

     8-10 Day Precipitation from NOAA shows upper Midwest / most of corn belt receiving moisture.  

     The trend is meh! New lows and more new lows, but always just a toe-dip and on weak volume. The market is not in the mood to blast through the bottom and blaze any trails. Country sales are slowing, as the price is at or below average gross production costs. Eventually there will have to be a motivation to move that wheat.

     We will see it and comment on it when the change comes. Meanwhile, stay alert, drink water, stay tuned to this channel.

MarketBullets® Tuesday July 30, 2024 : Pre-Dawn

     In every major wheat-production region of the northern hemisphere, spring wheat crop condition has declined in the last 2-4 weeks. Canadian spring wheat conditions have been declining, with Saskatchewan off 14% in the last couple of weeks to 76% good-to-excellent (GEx) versus 34% last year this week. Alberta shows a drop of 13% GEx to 60% versus 45% LY.

     In the U.S. Hard Red Spring states, the conditions have also declined. Idaho is showing 63% GEx vs 74% two weeks back. Washington is at 32% vs 48% for the week ended July 14. The 6-state average is 74% vs 77% two weeks ago. North Dakota is definitely the state holding the average together, with 81% GEx vs 82% in the same time frame. Meanwhile, U.S. winter wheat harvest is in its last 20% to go, mostly in the PNW and Montana.   

     All of this North American crop condition data is being carefully noted by the trade, even as France is seeing an 8-year low in crop condition at 50% GEx vs 78% a year ago, while harvest there has reached 41% completed. Other regions are also seeing at least some shrink of wheat crop expectations. Russia, which had already cut estimates of their milling wheat crop, has begun to re-inflate their estimates, all of which are substantially below last year’s crop size.

     In the far background, Australia has managed to pull a rabbit out of its hat, with timely rains following a dry spell earlier this season. They are currently estimating a crop of about 29 million metric tonnes, up about 3 million metric tonnes from last year.

     The charts do not provide any suggestion of a buy signal. Tuesday very early trade in Chicago saw September delivery contracts trading down 11 cents, putting the week-to-date figure at -3¾ cents, trading just 6 cents above Monday’s 4-year low. KC Hard Red Winter wheat futures printed another new low Tuesday AM, while Minneapolis Hard Red Spring (HRS) made $5.78¾, just 3½ cents above its long-term low. New lows are very often followed by more new lows, as the driving factors behind the move continue to play out (Harvest, even as crops shrink). We are in a price zone that has no recent history by which to steer.  

     There are few players in this wheat market that are willing to step in front of this train with money in-hand. Eventually there will be a pause, but it will take more than a hunch to dislodge the funds from their net short positions.

     For a marketer of new crop wheat, especially one that still has old-crop in the bin, this kind of price pattern is a tooth-grinder, setting up a shrug of the shoulders and a determination to hold for better prices. That is the bane of many a producer. Hopefully, some incremental sales have been made along the way, but if not, and cash is required to prevent borrowing at expensive interest rates, let go a little. If you must, you can consider buying call options to cover the sale and hope the market rebounds before they expire. The clock is not your friend in this. It’s a true speculation and not for everyone, but if it helps you sleep, it may be worth it. Remember that an at-the-money call is going to have close to a 50% delta (more delta will cost more), which is just the proportion of the price change it will gain of the actual price increase (or lose of the actual price decrease), at least for the first few cents of change. Another way to look at it is an at-the-money call starts out with price coverage of just half of the bushels in a regular futures contract of 5,000 bushels. Ask your merchant. There may be no rebound in time to make those options work in your favor, but it does work sometimes.   

     The trend is downward. Intuition will yell that “it has to turn upward soon”, but that has been proven to be a terrible way to make a trade decision. Stay on plan. Stay tuned in.  

Market Bullets® Sunday July 28, 2024 : PM for Monday July 29 Session

     For the week just ended, the wheat complex gave up 20-26 cents per bushel except for PNW white wheat, which was only down a nickel on the week. The buyers are relaxed and have recently shored up their shipping schedules. There is no driver toward adding new wheat purchases with the market aggressively challenging the multi-year lows again. It’s interesting to put on your wheat-importer shoes and take a look at what you would likely be thinking of the price trend if you were responsible for preventing food riots.

     The kick-off for the week on Sunday night into the wee hours of Monday is weak soup. Chicago is off 4¾ cents after midnight and has printed a shallow new long-term low, the 4th trading session in a row to do so. Minneapolis Hard Red Spring (HRS) is down 2 1/2, while KC Hard Red Winter futures are up just a tid (+1/4). Paris milling wheat – the bellwether of the Black Sea – was down the equivalent of 8 cents per bushel on Friday, with pre-opening indications pour Lundi unchanged to a little higher.

     The carrying charge reflected in the Chicago SEP-DEC futures (+$.25 carry over 3 months) or the DEC-MAR’25 (+$.21 carry) both are reflecting the market’s willingness to defer sales and delivery by paying storage and interest over either 3-month period of $.07 to $.08 per bushel per month (numbers given here are approximate and are presented as examples of spreads only. Applying trade decisions should be based solely on the reader’s opinion and applied real market data). When the market speaks this way, it is suggesting that there is enough wheat available nearby already. Ask your merchant about what this could mean for your marketing plan as we continue to grind out low prices.

      This market reminds me of those “two-a-day” football practices that were actually three-a-day in the humid days of late summer. Those wind-sprints…sheesh! But we always knew we were getting stronger!  

Market Bullets® Friday July 26, 2024 : Pre-Dawn

     This is the time of year to expect statistics to reflect crop size shrinkage, as wheat crops mature or are harvested. So far the adjustments have been minor.  

     We have erased all of the higher prices that traded on Russian invasion of Ukraine as if there were no disruptions of shipments from Ukraine at all…business as usual. Since that is not entirely true, and the basis for disruption of wheat production in Ukraine includes scarcity of parts, fuel, fertilizer and personnel, not to mention the fact that many good acres of farm production are near the front lines of conflict in eastern Ukraine. This is not a buy signal, but it suggests that the current lows in wheat may be setting a longer-term pivot point.

     The market is operating on very light wire-news flow, dominated by spring wheat weather and crop tours. The trend charts remain in a formal “downtrend” configuration, but a consolidation is clearly underway. Even a failure of recent lows dating back to 2020 will not likely trigger a large, sustained selling response. This is a test of the marketer’s patience, or at least it is allowing an operational focus on the last 25% of winter wheat harvest. The importer desks are watching closely, but they are not anxious (yet).

     The futures markets are called “futures” because they function on future events and probabilities. At present wheat prices are at a fair-value range that implies ample supplies and stable demand patterns for the foreseeable future. The big factors are Spring crop conditions including Canada and weather threats to maturing corn and soybeans, followed distantly by southern hemisphere crop development…not much for coffee-talk.

Its trackable. Let’s track it!  

Market Bullets® Thursday July 25, 2024 : Close

     Thursday’s wheat markets were weak, but produced no new sell signals. Chicago lost a dime in the September futures. KC HRW and Minneapolis HRS were both down about 7 cents. PNW white wheat slipped a nickel in the Portland/Coast market. Paris Milling Wheat futures were off the equivalent of about 8 cents per bushel. 

     The last day of the Spring wheat/Durum crop tour concluded Thursday with the final total weighted average all-wheat yield estimate of 53.8 bushels per acre (bpa) of 257 fields checked over the three days. Last year’s all-wheat over 343 fields was 47.1 bpa.

     The final tour average spring wheat yield estimate was 54.5 bpa, versus last year at 47.4.

     Average durum on 18 fields was 45.3 bpa versus last year at 43.9 bpa.

     Over the last 29 annual tours, the highest overall tour yield for HRS wheat was 49.9 bpa in 2015, and the best durum number was 45.4 bpa in 2016.

     The annual tour is sponsored by the Wheat Quality Council, a Lenexa Kansas-based Industry organization founded in 1938 by a wide group of millers, bakers, grain trade, seed firms, state wheat organizations and individuals to improve the value of all U.S. wheat classes.  

Market Bullets® Thursday July 25, 2024 : Pre-Dawn

     The Day-1 (Tuesday) Wheat Quality Council’s Spring Wheat and Durum crop tour found Hard Red Spring (HRS) average yields of 52.3 bushels per acre, versus 48.3 a year ago. The tour ends Thursday in Fargo, ND.  

     Day-2 of the Wheat Quality Council's Spring Wheat and Durum Tour summed up on Wednesday with a spring wheat yield estimate based on 99 fields sampled at 53.7 bushels per acre (bpa) versus 45.7 bpa for 2023. Durum averaged yield of 17 fields was 45.6 bpa vs 40.5 last year.

     The tour has not revealed any surprises, nor any substantial damage from Fusarium or scab.  

     Paris milling wheat futures commitment of traders report in the week ending last Friday, July 19 showed a rise in the net-short position in wheat futures, given greater reductions in long-side than short-side positions. Overall spec positions were reduced.

     Canadian wheat crop estimates agree with USDA figures. Australian estimates are increasing due to recent, long-awaited rains.

     Interest rates on 2-Year Treasury Notes have declined from 4.99% in the last week of April to 4.33% today. This move may not have consequences for wheat harvest prices, but the short-term trend suggests an easing of interest costs, a positive development for business down the road a bit.

      Most of the small information floating about is either inconsequential or negative in tone for wheat prices, but the hard decline since the last week of May has slowed farm sales and taken some of the steam out of the fund selling, although the net short-sold position in wheat futures is still heavy, if not historical in size. Corn and soybeans are dominating the wires with their flowering stage of development as the background for record net short-sold positions in both categories. Any serious weather development could be the spark that sets off a short-covering rally there, so the tension in the trade is higher than normal.

     U.S. winter wheat harvest is approaching its final stages, and the spring wheat crop tour is going to put some powerful fundamental numbers on the market. Crop numbers can only shrink from this point.

     The wheat futures lows printed only 7 trading sessions back are hot triggers for selling energy if they fail as support. That is only about 20-25 cents below present trade in Chicago. For KC Hard Red Winter (HRW), its about 20 cents, and for Minneapolis Hard Red Spring (HRS) it’s about 35 cents. These tripwires can be useful, as they are not expensive to maintain and they are intuitively powerful.

Stay tuned for more…eventually.

Market Bullets® Wednesday July 23, 2024 : Pre-Dawn

     Tuesday’s session gave us little guidance for any changes. The market is waiting for new input.

     The recent Hard Red Spring (HRS) wheat price rallies are based on global forward concern for protein needs. An anticipated large spring wheat crop resulting from good moisture usually leads to lower protein averages across the board. Everybody in the protein wheat business understands this, so this is just a reminder to watch the scales. A high-pressure ridge is dominating the north American spring wheat zone for at least another week, pushing the crop into rapid ripening.

     The US Wheat Quality Council's HRS/Durum tour started Tuesday. All wheat markets will be observing this tour intently. The starting gate is in Fargo, ND, where 40 or so crop scout volunteers from across the spectrum of wheat people have gathered; from producers to end-users alongside media, insurance reps, academics, guvmint folk. They are on the alert for effects of excess moisture.

     It’s the corn and soybeans that have the massive, record-sized net short positions in the hands of the big spec community, according to the CFTC’s Commitment of Traders Reports. That heavy position is fuel in the tank for short-covering runs. It may seem like fund money movement is similar to weather as a market factor, but it is not a fundamental force. The funds tend strongly toward technical-quantitative driven decisions, with momentum, volume, chart patterns…  The silicone-based mind can grasp these as guiding factors. This creates opportunities for us carbon-based entities if we have observed carefully. In this environment, we see the phrases, “short-covering” and “momentum”. The common qualities of a short-covering rally are short duration and high intensity. They usually only end after extending past expectations enough to trap unwary late buyers, followed by a rapid regression to the central indicator (statistical mean). All of this is merely to remind marketers to perceive these common rallies as short-term only, taking advantage when the marketing plan applies to make incremental sales.   

     It may be a dull period in grain futures, particularly for Wheaties, but this is a good time to review the marketing plan (That is if you are not sitting on a combine all day, leaving only enough time to shower, eat and pretend to watch TV for a few minutes before bed).

This is a trackable thing. Let’s track it!

Market Bullets® Tuesday July 23, 2024 : Pre-Dawn

     Russian wheat harvest is counted as 38% in the bin. Evidence of previous weather damage is showing.

     U.S. national winter wheat harvest progress is pegged at 76% done as of July 21, ahead of the 5-year average by 4%.

     PNW white wheat harvest shows WA at 10% versus 16% average. OR 35% vs 26% normal. ID 7% vs 9% average.

     WA spring wheat condition is declining rapidly in the heat, reported at 41% good-to-excellent this week versus 48% last week. ID HRS is rated 60% GEx vs 74% last week. Overall HRS is at 77% GEx this week, unch against last week. Canadian spring wheat is in very good condition, running in the mid-70% range in Alberta, last seen at 90% GEx in Saskatchewan, although those numbers are expected to shrink also.  

     U.S. Hard Red Spring (HRS) wheat crop condition shows 67% good-to-excellent, unch from last week.

     Based on USDA inspections for loading, U.S. wheat exports marketing year to date stand at 2.591 million metric tonnes (95.2 million bushels). +20.22% more than by the same week last year. With Chicago new crop prices generally $2.40 below last year at this point, there is no surprise that exports are a little better, although not enough better (yet) to trigger a price increase. The market is not sensing a need to price-ration supplies of wheat.  

     The futures charts are not yielding much, trading just above long-term lows. The process of building a pattern base that will allow healthy retracements back to the upside is still lagging. The useful points to observe are any challenge of those lows, using that point as a back-stop and a tripwire alarm. There is no buy signal evident in Chicago, while Minneapolis Hard Red Spring (HRS) continues to lead on global concerns about sourcing quality protein going forward, due to damage to Russian and European wheat crops.

     The trend is still defined as negative. 

This stuff is trackable. Let’s track it!   

Market Bullets® Monday July 22, 2024 : Pre-Dawn

     Very early trade Monday morning showed buoyant wheat prices, choppy for a few hours and then some new daily highs at about 2:00 AM PDT. There are no significant fundamental headlines, and no high-powered chart patterns to frighten short-sold funds or attract new buying money, leaving the short-term market activity vibrating in a narrow range with a very slight upward tilt.

     The effect of the now-37-session price slide in Chicago wheat futures has been to slow producer sales and stimulate export sales. The global wheat market is technically sniffing out long-term lows, a process takes time and is always fraught with risky impulses to buy, or to hold wheat in the bin too long. Harvest has enough distractions to make producers unwilling to make the calls anyway.

     The world knows that U.S. winter wheat harvest is advancing very swiftly, and the spring wheat crop may end up being larger than anticipated, which helps keep the lid on prices.  

     US wheat export sales at 35% of the USDA projection at 7.76 million metric tonnes, 1% better than the 5-year average pace, quite a change from last year’s constantly lagging figures. Loading inspections to date total 2.2 million metric tonnes, 1% below the 5-year average. No market-shocking items here, but much improved over last year. The current front-month price in Chicago Soft Red Winter (SRW) wheat is more than $1 per bushel lower than the same week in 2023. Seems like there is a calibration due.

     Prices can still go lower, as markets often exceed expectations, but the current pattern does give us a hint that it is probably time to put away the outsized short-sold positions that have been so common over the last year. The fund traders will respond readily if a confirmation of a low is produced. That net short-sold position is fuel for a short-term run-up that may be enough to identify long-term lows. It is still dangerous to over-anticipate lows, but a plan should include what to do if the pattern changes.

     The wheat price trend is showing base-building tendency. Watch for testing the recent lows at least once before another sustainable leg up. Use last week’s lows as a tripwire for another incremental sale if the plan allows it.  

     The wheat market is watching corn for a clue, as it is known that there are still quite a few bushels in storage that may have to move before corn harvest this fall. If corn prices get a weather rally, those bushels will likely keep a governor on the price throttle unless it gets really serious.

     100+ degrees and 10-15 MPH winds are not unfamiliar to most harvesters, but these are the conditions under which fire becomes a near threat, so we keep the water cannons loaded and sniff the air for hot bearings or hydraulic pumps. Keep the disk close and ready and stay safe.

Stay tuned for more…

Market Bullets® Friday July 19, 2024 : Close

     French wheat crop condition dropped 5% down to 52% good to excellent per AgriMer. Paris Milling Wheat futures jumped €8.75 per metric tonne (about $.26 per bushel), back to  its 2-weeks-ago level of prices before the gap lower on Monday morning. That gap has been vigorously filled.

     The Chicago September futures chart has a veritable ladder to climb, with each technical target on any rally followed immediately with another moderate challenge target. The recent lows are now a kind of backstop for decisions. If those lows are challenged in any meaningful way, it will be obvious, allowing appropriate responses (Selling an incremental slice?).

     The wheat price trend put in a mixed week. KC and Minneapolis hard red wheats both managed a positive net. Chicago ended Friday’s episode with a close well below its early highs. Paris milling wheat was the leader in early U.S. trade. The trend consolidation is likely to take some time, with volatile, whippy action and anxiety about possible political violence and massive internet interruptions that grounded more flights, more quickly than 9-11. Its been a strange week, and we should all be glad that Trump was not killed, as the upheaval from that event would have been unspeakable. Markets do not respond well to drama, so we count our blessings now, pause and pray a little for the families that had losses at Trump’s rally, and try to set up for the next week.

     Stay tuned. At least it is not boring. -More commentary Sunday PM/Monday AM.  

Market Bullets® Friday July 19, 2024 : Pre-Dawn

     All of the week-to-date closing settlements for Chicago wheat futures have been within a few cents of $5.34. A new long-term low dating back to August of 2020 has been printed at $5.25¼. An uptick in global import activity suggests that end-users are sensing a seasonal low is near.

     KC Hard Red Winter (HRW) has also traded at a $5.45¾ low dating back to December of 2020. Minneapolis Hard Red Spring (HRS) is reacting to solid crop quality assessments with its own long-term low at $5.75¼.

     The market sees these new lows, but is not reacting with fear and loathing. Northern hemisphere harvest is top of mind, so there is not much shock and awe. Most of the fundamental data has been well-absorbed and accounted for. A few more nominal lows may even appear, but there is a slowly growing sense of anticipation of a seasonal low ahead.

     This does not mean a new rally is about to launch, only that the steep decline of the last 8 weeks is expected to de-accelerate and begin to build a base. The intensity and duration of the price drop this year will eventually produce some in-proportion reactions…not a tradeable idea yet.           

     Weekly wheat export sales showed a total of 578,502 MT for the week of July 11, the high end of the 225,000 - 600,000 tonne pre-report range of estimates and over twice the previous week.

     International Grains Council (IGC) projections as of July 18, 2024 show world wheat ‘24/’25 production up 1% from last month’s estimate at 801 million metric tonnes, with global ending stocks expected to be up 3% to 269 million tonnes.

     The wheat price trend is still classified as downward. Stay on plan. We will see the change when it comes.

This stuff is trackable. Let’s track it!   

Market Bullets® Thursday July 18, 2024 : Pre-Dawn

     Yes, the end-users have become interested in buying wheat. Those Egyptians manning their buying desk are experienced, practical and intelligent. They are telling us something, which is that wheat is cheap and this is the season to gather in the sheaves. The seasonal low is sometimes an elusive target, but this one is getting near. One thing that markets often do is move in proportion, in this case in proportion to the massive and swift downward move to current lows. The problem is only that there is no recipe for identifying a low in advance. We only really know a low when the turn has come. That is not a big problem unless we try to guess the bottom in advance. It will come when it comes. Meanwhile, we watch and listen to the market tone and intensity. It is not necessary to catch the last bloody penny, only to be on board the price train at some point before it leaves the switching yard.  

     Nearly the entire amount purchased by Egypt from Russia this week was below Russia’s self-imposed lower price limit by $39 per metric tonne or so ($1.15 per bushel).

     Algeria bought at least 600,000 MT of wheat in their tender on Wednesday. South Korean importers purchased 40,000 MT of US wheat on Wednesday. The crowd is moving.

     Does this mean the low is in? Mebbe! Mebbe-not. We will see it in the charts first, then the fundamentals will become the supports confirming the environment. It pays to be paying attention in this period.

     Every day passing for northern hemisphere wheat production is another day with less crop risk. With less and less green wheat still exposed to weather shrinkage, the market is turning toward other factors for price allocation. There is a brief lull until the southern hemisphere harvest begins, during which the demand for wheat is the most important factor. This is less intuitive than crop condition as a market guide. It includes many factors that are not direct in nature, like interest rates (storage costs), political stress (elections and potentials like tariffs and other market manipulations), freight costs, economic strength of various buyers and the motivations of wheat producers and originator companies, to name a few. This implies more difficult trend-reading, putting pressure on observation and marketing plans.

     Humans are often not very good at trading, as they have a strong natural tendency to hold onto positions during declining price periods, and conversely then being too quick to sell off during rising price moves. Experience says that the way to overcome this naturally problematic tendency is to have a good, detailed marketing plan that includes incremental sales based on some defined criteria. It’s not a big challenge to design such a plan, but the challenge comes at actually staying on the plan against strong emotional currents. Selling even a small amount of a crop at an obvious low can chap one’s hide, but the fact that the real low could be quite a bit lower in hindsight is the killer. $5.40 per bushel looks bad against last month’s $6.40, but it can also look quite a bit better from $4.70 (the next lower technical price target). That is why incremental sales are so important. There is always that next slice to be sold at a potentially higher price. Uptrend = “be patient”, downtrend =  “be quick”.

     The low is due, the trend is downward. Be quick to hit the planned sale, then wait for the low to show.

Stay tuned. Good hunting!

Market Bullets® Wednesday July 17, 2024 : Pre-Dawn Update

     There is still value in hard-copy charts. Try this: print a full-sized wheat futures chart. Lay it on the desk or a table, then back off a few steps and squint at it. Disregard whatever you know about the market for a moment. What is your impression of the movement of prices from a little distance? Even if you are comfortable with peering at a colorful and information-laden picture on a screen, or on that little time-stealer in your pocket, the impression of movement and direction is qualitatively different when its sitting on a table in pure, two-dimensional form. Sometimes a little fresh perspective can wash out crusted-up thought patterns and open mental avenues. Those old guys sometimes did get it right.

     Chicago is in a price-pause right at the tipping-point, standing on the plank, hanging ten. The market knows this very clearly. Importers have expanded their buying (Egypt pulled down a nice 770,000 metric tonne purchase at one shot this week, mostly from Russia with one cargo from Bulgaria). Even U.S. export sales have twitched upward, with the crop-year-to-date sales (starting June 1) reports totaling 7.1 million metric tonnes, up 42% from last year’s pace in the same period. This is no shock, as lower prices always stimulate more interest from end-users. Still, it’s nice to see the market accomplishing its objective of finding homes for all wheat.

     The wheat trend is not upward (yet). It is probably way too early to capture a low, and there is still quite a bit of downside momentum/risk for gambling with long options to replace any cash sales. If that strategy is of interest, it is best not to tie the purchase of calls of establishing futures long positions directly to the timing of cash sales. The criteria for the two are rarely in harmony. Separate the two and judge them for what they are on their own merits. Your results will be cleaner.

Market Bullets® Tuesday July 16, 2024 : Pre-Dawn Update

     Capitulation: “the act of surrendering or yielding: the terms of surrender.” How many wheat sales are being made under this heading? There are bills to pay; fuel, wages, parts, food…these expenses do not take the summer off. The marketing plan notwithstanding, the driver of “holding wheat in the bin for higher prices later” is a very poor decision-making basis. At this point, there are actually reasons to expect a bump, but harvest is not easily going to make such a gain significant or lasting. The ancient problem of holding wheat in storage as a speculative action is that there surely will be a rally, its just that it might start from a lower price than current trade…a lot lower! It may be many months, even years before we see another period of high prices like the one that just expired. We will know when it starts, but never how far it will go. That is the reason for being a trend-watcher. Stay on the trend. Let it pay you. There is no reason to suffer if you have been patient with uptrends and accelerate in downtrends.

     The trend in wheat is lower. Anticipating a price bottom is tempting, but it doesn’t pay well. Most of the time there is less than 1/3 chance of being correct about identifying the lows, and even that figure is over an historical period and requires great diligence. It will take time to rebuild buyer confidence in wheat futures prices, which will show up as consolidation patterns.  

     The price of storage, interest costs, and inflation of expenses all work against your chances of success in storage speculation. The capital gets restless and feels abused when it is held idle.

     National winter wheat harvest is 71% done. Spring wheat cutting will soon be rolling.

     Export inspections are improving as consumption takes a ride on the cheaper prices.

     Russian wheat production numbers are beginning to climb back up as they discover that the freeze/drought didn’t hurt those grass plants as much as they had feared.

     Ukraine’s harvest is also revealing better numbers than had been anticipated.

This stuff is trackable. Let’s track it!

Market Bullets® Monday July 15, 2024 : Pre-Dawn Update and Review of Week ended July 12.

      For the week, Chicago September futures dropped 39¾ cents, to a low last seen in the first week of April ’24. Trade in the wee hours of Monday July 15 followed through with prejudice on a minus 12-cents. The failure of the Chicago wheat chart technical defense lines to hold against the weight of harvest has release some pent-up selling pressure. Some of that is producer selling. With harvest bills to pay and probably some delayed marketing of old crop wheat from the “hopeful” bin to make room for the new stuff, the market has no reason to deny lower prices.

     Minneapolis Hard Red Spring (HRS) is making new long-term lows, as crop conditions have been strong, even as the KC Hard Red Winter (HRW) market has been able to hold above its old lows. The old price walls are tumbling down.

     PNW white wheat has found no reason to ignore the sink-hole in the red wheat markets, with a decline of 20 cents on the week ended July 12. Harvest for Soft White Wheat  is going to move rapidly north as the high temperatures have turned even the north slopes and gullies and halted any more filling of the sucker heads. Its time to roll the machines!

     Highly anticipated Russian crop losses on a freeze and then a drought that had been the driver of global markets have evaporated. Not that that government would ever exaggerate such a thing to prop up market prices…

      The USDA’s July World Ag Supply/Demand Estimates were not a net surprise for most of the trade, but they merely confirmed that there were not reasons to hold back on sales. Their “outlook for 2024/25 U.S. wheat this month is for larger supplies, domestic use, exports, and ending stocks. Supplies are raised on increased wheat production and beginning stocks. All wheat production is raised 134 million bushels to 2,008 million, on an increase in harvested area and higher yields. The first 2024 survey-based production forecasts for other spring wheat and Durum indicated an increase from last year for both classes at 578 million and 89 million bushels, respectively. Winter wheat production is also forecast higher at 1,341 million bushels on an increase in harvested area and yields.

      USDA’s projected 2024/25 season-average farm price is reduced $0.80 per bushel to $5.70 on higher stocks, recent declines in futures and cash prices, and lower projected U.S. corn prices.”

     In the same report, “the global wheat outlook for 2024/25 is for larger supplies, consumption, trade, and stocks. Supplies are increased 6.9 million tons to 1,057.2 million, primarily on larger beginning stocks for several countries and higher production, mainly for the United States, Pakistan, and Canada. Pakistan’s production forecast is raised 1.4 million tons to a record 31.4 million, based on government estimates indicating a large yield. Canada’s production is increased 1.0 million tons to 35.0 million on improved moisture conditions in the Prairie Provinces.

     Projected 2024/25 global ending stocks are raised 5.0 million tons to 257.2 million, mostly on increases for the United States, China, Argentina, Pakistan, and Canada more than offsetting reductions for Russia, the EU, and Iran.”

      It is difficult to find any notes in the USDA report that inspire buying wheat for profit, so the big spec trading funds discerned a mandate to add to short-sold positions.

     The trend for wheat is down. Don’t fight it. Keep in mind that holding onto un-covered wheat positions is expensive and it may be some time yet before there is any compensation.

     In the background of all of this bounty of guvmint information,  we have global election angst at high levels and a sort of horrified fascination with American political activity. People have to eat, and prices have been making buying wheat easier, so consumption figures are likely to expand along wheat harvest results. The job of the market is to re-home/ distribute wheat using price to maximize availability. Encouraging end-users to buy more wheat is just what is happening, which in the long run is what keeps the market healthy and able to continue to pay the most low cost/efficient producers to continue output. We will find a low. It is out there. Meanwhile incremental sales should not be delayed and maybe even accelerated. Ask your merchant about the option tools that may allow a bit more price in exchange for time.

Interest rates as expressed in the 2-year Treasury Notes have been coming down to levels last seen in mid-March. The Fed may find a way to lower their controlled rates soon.

     Diesel has reached its 38.2% downward retracement from its FW June to FW July up-move. It’s shaping toward a pattern-based potential for another 30-cent leg lower to about $2.40 to $2.30 New York Harbor. It’s worth following if you have to fill the tanks soon.

     Gold futures are approaching a challenge to its all-time high, now trading at $2,413 per Troy ounce, looking at the May peak at $2,414. This a decent gauge of global anxiety, suggesting more volatile and treacherous markets ahead.

This stuff in trackable. Let’s track it! Please text or email questions for clarifications.      

 More to come…Please stay tuned

Market Bullets® Tuesday July 9, 2024 : Pre-Dawn

     Brazil’s corn harvest is moving quickly, passing the 63% mark this week. Corn production in the northern hemisphere is shaping toward a heavy crop.

     Big Speculative entities have been slowly adding to net short-sold positions in wheat futures.

     Fertilizer prices have been fading over the last few weeks, with natural gas prices moving lower in a wide range of lower highs and lower lows for the last 18 months. Nat gas comprises about 60% to 70% of the cost of production of anhydrous ammonia.

     Wheat is working out the base for the next move, trading about 25 cents above the consistent lows since March, and in a band of prices that have regularly revealed buying interest since September of 2023. This low range is the tripwire alarm for lower prices if it fails to contain the sellers. If the base is sustained, the ratio target on the upside is about $6.24, about 50 cents to the north of current trade in Chicago futures.

     Our “Box-o-rox” 60-day moving average says, “proceed without delay to complete planned incremental sales”. With harvest moving faster than the averages, there is bound to be some wheat for sale along the way, so the expectations for any serious upward potential is still some weeks away.

     USDA’s monthly World Ag Supply/Demand Estimates (WASDE) will be released on Friday, July 12 at 9:00 AM Pacific, 11:00 AM Central.  

     The price trend for wheat is sideways at the low end of recent range. Rallies are likely to be brief and limited, but worth identifying for incremental sales.

     Stay tuned here for more later.

MarketBullets® Monday July 8, 2024 : Close

     Diesel is backing off of recent highs, trading at $2.5732 per gallon in New York Harbor, the same price level as July 1.

     US Dollar Index is slightly lower – still just above its 20-month mean.

     The developing technical challenge of recent $5.60+- lows in Chicago wheat futures will result in a readable short-term chart inflection point. Either the market will break downward through a price zone that previously held buying interest enough to support the price, or it will bounce off of that zone and create a 1-2-3 price reversal signal if it breaks above the $5.91 level. This is only a brief wiggle in what is shaping up to be a long period of such abbreviated price moves through the balance of harvest.

     The price headwind is obviously the last half of the northern hemisphere wheat harvest. Coupled with a large corn crop, the going is likely to require some work to identify decent sales points. This is where your merchant can help with strategies that can boost marketing performance.

     PNW Soft White Winter (SRW) is steady at $6.00 Portland thru September delivery, with harvest as of July 7 in the small single digits completed in WA-OR-ID. USDA reports overall U.S. winter wheat harvest at 63% complete versus its 52% 5-year average. The 6-state spring wheat crop condition is 75% Good-to-Excellent condition versus 72% last week.

MarketBullets® Monday July 8, 2024 : Pre-Dawn

     Pre-Dawn Trade on Monday in Chicago Soft Red Winter (SRW) wheat were running negative. September futures were trading down 9 cents at about 2:00 AM. KC Hard Red Winter (HRW) futures were down 12 cents, while Minneapolis Hard Red Spring (HRS) was trading down about 7 cents.

     Last week’s USDA Harvest Progress report showed that the combines are either being moved into the shed in Oklahoma or moving on northward. The five year average for the same week is about 84%. Kansas is at 80% complete versus 49% average.

     Winter wheat condition was reported last week at 52% Good-to-Excellent versus 40 last year.

     Spring wheat is seen as 71% overall Good-to-Excellent 48% last year.

     All of the above harvest and condition reports will see a new weekly release today, Monday July 8.

    U.S. wheat export sales last week were better than anything we have seen since the Chinese-driven Christmas rally last year, which was ultimately cancelled. At this very early point in the crop year, export sales are 32% ahead of last year, same week. Driving factors for this phenomenon include a dramatic price decline of over $1.60 that started on the same week as the new crop-year started. Russia is still dominating global wheat prices, and if successful at capturing control of Ukraine, will continue to push OPEC-style pricing power for decades to come.

      France is expecting a smaller wheat crop this year than any in the last 8 years. Currently expected French production is about the same as Kansas and North Dakota combined.

     Sniffing around for price-positive, buyer-inspiring factors,  corn is still looking at a record net short-sold fund position. Eventually this becomes fuel for a short-covering rally. This is an indirect factor and can be frustrating to apply to wheat price analysis, but it is a supportive expectation in the absence of other, more direct wheat price drivers. It will take some dramatic event to trigger the funds into rushing for the buy-back exits.

     One of the potential events that occasionally light the fuse on short-covering rallies is the WASDE and Crop Production reports. The next data release is Friday, July 12 at 9:00 AM Pacific Time, 11:00 Central.

      The trendline is still weak, even with the now-three-week-old rally in wheat futures. Successful wheat marketing this year will require quite a bit more attention than it did last year. Harvest is over halfway completed in U.S. winter wheat country. The market presently sees no heavy reason to ration wheat supplies via price allocation at present. The wheat pipeline valve opens and closes on about 50 cents either way at present.

Stay tuned. There will be opportunities.

MarketBullets® Wednesday July 3, 2024 : Pre-Dawn

     Wednesday’s trading session will end at 11:20 AM Pacific/1:20 Central (Normal Close). Trade will re-start on Friday morning at 6:30 AM PDT/8:30 AM CDT.

     This week’s crop condition report showed the 18-state winter wheat rating at 51% good-to-excellent, off 1% for the week but 11% above last year’s condition for this calendar week. Spring wheat showed 72% good-to-excellent versus last year-same week 48%.

     Washington’s winter wheat crop rates 48% g-ex, versus 51% last  year, Oregon is at 67% g-ex, far above last year’s 21%, and Idaho winter wheat rates 81% g-ex this year versus 48% last year.

     The trend for wheat in the major futures markets still counts as negative, but the last 6 sessions including Wednesday pre-dawn trade shows about 27 cents up from the lowest close on June 25th in Chicago. KC has gained 13 cents from that low, while Minnepolis Hard Red Spring futures are 33 cents above its low in the last week of June.

Tune in again on Friday for the weekly summary and full update.

MarketBullets® Friday June 28, 2024 : Weekly Closing Update

     The quarterly US Grain Stocks inventory report showed new NASS estimates higher than average pre-report surveyed guesses for wheat, corn and soybeans. US corn and wheat planted areas were down from last year, but beans were up from last year.

     The Chicago wheat futures market immediately dropped 12 cents, a tad more than half of Thursday’s gains, trading briefly at $5.66. At the close, Chicago was 9 cents above that low, down just 4 cents on the day.

     KC Hard Red Winter (HRW) printed a low just one cent above its previous weekly low, which itself was the lowest since April 19th. At the close HRW was a dime above its Report Day low, netting a dime loss on the day.

     Minneapolis Hard Red Spring (HRS) managed to hold to just 4 cents down at the close.

     On the week, wheat markets were steady. PNW white wheat bids were quietly off a nickel, while Chicago and KC both settled within a cent of their week-ago Friday close. Minneapolis gave up about 4 cents on the week.

     The report will likely have some lingering negative effect on wheat prices, since it was not supportive, but the focus of the trade will shift back to harvest and demand.

     The short-term negative price trend in wheat is paused. The support zone under our bellwether Chicago futures has been established for 3 sessions between $5.58 and $5.60, about 15-17 cents below Friday’s close. The longer this price zone holds, the more significant it becomes.  

More details and weekly summary pending.

MarketBullets® Friday June 28, 2024 : Pre-Dawn

     Some short-covering ahead of the Stocks and Plantings reports on Friday AM gave Thursday some buyers at last! The profit-taking may have been spooked by a nice positive export sales report put Chicago on a gain of 19. KC and Minneapolis were both plus 15. PNW white wheat bids acknowledged the general buying with a whole nickel. If the price in Chicago can hold onto its gains after the report on Friday 9:00 AM, 11:00 Central, then Portland might come up with a few more cents.

     The trade is looking for U.S. planted wheat acres to be up slightly from the previous report in March. June 1 inventory in pre-report guesses are averaging about 684 million bushels in a Reuters survey. The June Stocks and Intention reports have a history of surprising the trade, but any quarterly reports have that potential.

     The International Grains Council (IGC) released a fresh report with a 1 million metric tonne increase to world carryout at 261 million tonnes, about 4 tenths of a percent change. Call it “Steady”.

     The up-day was the strongest single session since May 20th, and helped set a baseline from which to measure decisions going forward. The little, 3-day series since Tuesday put in similar lows at about  $5.60, suitable as a way to measure failure if the market cannot hold after the report. This one is tradeable for the spec guys, so they will likely be in a crowd just below those lows, ready to pounce.

     The report will show on the charts by 9:05 Pacific, for better or for worse. Friday’s closing update will take a look.

Stay tuned. Good hunting!

MarketBullets® Tuesday June 25, 2024 : Pre-Dawn

     Some high-momentum negative wheat price charts, especially the Minneapolis Hard Red Spring (HRS). The crop reports are not scaring the funds as they continue to steadily add to short-sold positions. The US Dollar Index is steady, as is the Ruble/Yuan relationship (The announcement of the big shift to Chinese currency reserves for Russia is maybe not the event that Putin had hoped, although the sanction setup did not leave him much choice. Russian wheat and oil is still moving into the market smoothly.

     The relevant list of factor news is slim, leaving the smaller speculators (that’s us holding onto un-covered wheat in the bin or in the field) without a clear mandate, unless you count the fact that the trend is downward until it changes measureably, thus promoting current incremental sales of remaining old-crop or still un-covered new-crop. The pressure is on those who are long in any capacity. This is when staying on the side of the trend counts. It does take some of the pressure off to sell a slice or two. There is no reason to expect a price bounce more than 50% of that last free-fall, say maybe back to that $6.00 level, about 50 cents from current. The downside is certainly still open, with sensitive tech levels from about $5.25 down to $4.85. The question then is what if it gets there? What will be the proper response? The good answer is to not go there without any coverage at all. If your plan says keep selling a downtrend on regular scheduled amounts, keep on the plan, man!

     There will be a bounce…but from what level? This is a very old problem that returns to haunt us when we have not done what we aughta. There are strategies. Call your best merchant and talk it over with them. They don’t know the future but they answer the question every day.

     The world exporter stocks-to-use ratio is at a record low.  Seasonal harvest lows are due, potentially triggering a short-covering rally before the key USDA Stocks/Seeding Reports next Friday. Wanna take a ride? It might not be much fun.

‘Tis trackable… Let us track it!      

MarketBullets® Monday June 24, 2024 : Early AM

Nothing interesting to see in this morning’s trade, folks. Going fishing!

MarketBullets® Friday June 21, 2024 : Close

     Minneapolis Hard Red Spring (HRS) futures closed at a new low dating back to the first week of April 2021, the first week of accelerated upward trend that culminated in the extreme highs generated by the Russian invasion of Ukraine in Feb of 2022.

     KC Hard Red Winter (HRW) reached a new low dating back to April 2024, a stronger pattern than HRS and very similar to Chicago Soft Red Winter (SRW) futures.

     Crude oil at $80.59 is within a dollar per barrel of the flat center of the price range it has occupied since August of 2022. The range is about $30 deep from high to low, with highs around $95/bbl and lows at $63.50. There is a very moderate upward bias at present. No chaos here.

     US weekly wheat export sales came out at 589,000 tonnes, better than expected.

     Friday’s stock market trade was quiet ahead of “triple witching hour”, a derivative expiration day for some $5.5 trillion worth of options based on index’s, stocks, and ETF’s, which expired Friday  per “SpotGamma”.

     Nebraska-South Dakota are expecting rain and-t-storms which may extend into Minnesota -Wisconsin.  Some areas of Northern Nebraska saw 1-3″ Thursday, some heavier. The remainder of the US will be mostly dry into the middle of next week. Most of the PNW wheat country is expecting low 90’s to mid-80’s and clear for the next week until Thursday and a chance of rain. Conditions are good.

     The market influencing news is fragmented. There are inputs from all around, but nothing to catch the wheat market’s imagination. The trend is downward until further notice, that is a pause and correction is overdue. That kind of price increase is not a buy signal, as contra-trend momentum trades are notorious for being viciously volatile. First the momentum of the downward slide of the month-to-date will have to be blunted, followed by a consolidation. The odds of a quick return to the recent highs in late May are not strong. The market has buried the “Russian freeze-drought rally” almost entirely. That is because a large part of that runup came from spec fund short-covering. Once that coverage had been achieved, we have had to move on to…plenty of wheat.

     Every day while searching for fundamental support for higher prices we will be looking for that corrective rally, which could appear quickly. The trade will be anticipating the next USDA data-dump on Friday morning with a quarterly Grain Stocks inventory report at 9:00 AM Pacific / 11:00 Central. Most large speculative traders have an aversion to establishing large positions in the week before a major USDA report, so the upcoming week is likely to be volatile and choppy. The trend is negative for now. Stay on planned incremental sales. Call your merchant about HTA’s.

Stay tuned, there’s more to come.

MarketBullets® Friday June 21, 2024 : Pre-Dawn

     MarketBullets will be rolling most grain charts from July contracts to September on Monday, June 24. End-of-quarter is watershed date for funds. It’s when many calculate their quarterly paychecks based on profits (if any). Positions are already being rolled (buying back July and selling September or December at the same time). The spreads are showing it as the July futures were down less than the deferred contracts on Thursday.    

     On Thursday, Chicago July closed 7 cents above its lowest trade on the day, but still down 9 cents.

     Hard Red Winter wheat yields have so far been slightly above expectations in Texas and Oklahoma. Kansas has completed 28% of its harvest and is also hitting yields that are average or slightly above previous estimates.

     Private Russian analysts have begun to walk back some of the recent crop estimate cuts, posting new estimates that are slightly better.

     KC Hard Red Winter (HRW) is back to its mid-Feb / Late-Apr range. Major lows between $5.51 and $5.61. If they are overcome by downward movement, there are few old-school technical objects until the low of August 2020 at about $4.10 ($1.88 below current).

     The Buenos Aires Grains Exchange (BAGE) bumped its wheat planting estimates for Argentina by 100,000 hectares (247,000 acres), to 6.3 million hectares (15.57 million acres), a 1.6% increase. Argentina continues to show signs of more aggressive attitudes toward exportable wheat in the next year, as they pull back from a previously socialistic setup.

     Heading into Friday of a 4-session week with 38 cents of losses smells like a profit taking day, as the swing traders have become quick to clip coupons. The meaning of a rally on Friday is limited, with a lack of fundamental or technical motivators beyond momentum trades. Country movement has stalled, even with harvest rolling, although there is always some easy wheat entering the channels to pay bills. The market is having no trouble finding enough wheat to fill needs. This condition will be with us for a few weeks, so barring any disastrous shift in weather patterns (too much moisture, or a “high pressure dome” raising temperatures to extremes on the northern tier and Canada), the expectations of radical moves is muted for the present; an environment that calls for incremental sales at regular intervals unless there is at least a short-term upward wave, a pattern that involves careful and deliberate marketing.  

     There is a very good Spring Update Letter available from Northwest Grain Growers available <here>.

     Next USDA data release: Stocks-In-All-Positions inventory report due in one week, Friday June 28, 9:00 AM Pacific, 11:00 Central.

It’s trackable. Let’s track it!

MarketBullets® Thursday June 20, 2024 : Pre-Dawn

     In the wee hours of Thursday June 20, the Chicago July futures contract was down 5-7 cents, thumping hard on its 78.6% retracement line. That is down $1.24 from May 28, the highest close of the 57-session runup from the Ides of March (which were also a low point for Julius Caesar). The 78.6% line is a kind of last-ditch turning point, beyond which is a yawning pit allowing a return to the $4.24 level according to the ratio approach, not seen since May of 2019. That target is very unlikely, but a failure here of the $5.76-$5.70 zone suddenly points Chicago wheat toward a challenge of the $5.23-$5.60 levels that revealed buyer interest back in March and April’24.

     But this down-move is getting mature, having lasted 16 trading sessions with only 2 that showed any positive tone. The market structure is getting tilted again and will need a corrective bounce soon. The strength of the rally that ended at the end of May was fueled largely by short-covering due to the threat of Russian freeze-drought crop losses. Part of the fear that drove the funds to cover came from some dubious statistical sources, and part from plain old FOMO among the funds, whose profits on large short-sold positions had been looking very favorable for bonus paychecks at the end of the quarter. Once that big short had been mostly covered, then it became a new hunt, and the funds have begun re-establishing those same short-sold positions, with harvested wheat hitting the market and declining risk from weather on maturing wheat. Now it gets more challenging for the marketer.

     The short-term trend downward according to the Box-o-Rox indicator is negative, with the July now 45 cents below that 60-day moving average (see Chicago Daily Chart) above. There is a strong temptation to hold on for the inevitable bounce, but the problem with that strategy is that doesn’t always work but it always leaves the door wide open for a much larger loss. It’s OK to miss a planned selling point in an uptrend, but in a powerful, nose-down dive, it can become a real problem to pull up before hitting the ground. The next couple of trading days will tell. If the 78.6% zone holds, then that becomes a trigger and a technical backstop. If it fails, then it’s at least incremental sale time.

     The charts, along with most of the trade, are about to roll to September futures as the July is approaching delivery. There are about 17 cents in between the two Chicago contracts, as the higher-priced September is reflecting the market’s incentive to hold wheat until later delivery periods with a better deferred price. There is another big, 25-cent carry between September and December. The market is telling us it does not want physical wheat now, and is willing to pay storage and interest costs to hold it back. Ask your merchant about HTA’s and other tools. The carry in KC Hard Red Winter (HRW), Minneapolis Hard Red Spring (HRS) and even Paris milling wheat are smaller, but the principle holds.

Stay tuned, at least it isn’t boring…

MarketBullets® Tuesday June 18, 2024 : Close – Pre-Juneteenth Market Holiday

     Monday and Tuesday saw brutal price declines, including volume confirmation. The total price drop for the two days was about 30 cents in Chicago Soft Red Winter (SRW), KC Hard Red Winter (HRW) -18, Minneapolis Hard Red Spring (HRS) -26 and Paris Milling Wheat 11.5% -€7.75 per metric tonne (-$.22 per bushel equiv).   

     USDA’s National Ag Statistics Service (NASS) Crop Progress report showed Kansas harvest pace at 28% complete, 20% ahead of normal.

     Most of Western Canada has rain in their forecast, heaviest to the east. Conditions are good.

     July grain options expire on Friday June 21st. If you are short puts in-the-money, even if just a little, exercise is a sure thing. You will inherit a long-bought July futures contract at the strike price (including the loss). You won’t have much time to decide what to do with it. If you short the July futures before the fact, it will effectively close the position and wash out on expiration day, just remember that if the market rallies you will not gain from it, and if it rallies above the original put strike price, the futures will begin to cost you. There is occasionally a small (micro) chance that a short, slighly-in-the-money option will not auto-exercise, but that is a rare bird, indeed. The moral is that it is usually better to simply close the position, or roll out to a later month, or cover with futures earlier. Take the “L” and move on.

     It may not be intuitively easy, but the close of wheat trade on Tuesday was right on top of a 3-point trendline on the weekly Chicago futures chart, not a big signal, but ONE of these points is going to be a tipping point. Thursday/Friday markets will honor or deny. At least this is something to watch Thursday morning.

Stay tuned.

MarketBullets® Monday June 16, 2024 : Pre-Dawn

     Crop condition in PNW shows WA winter wheat 47% good-to-excellent, down 1% versus 48% last week. Oregon 57% this week down 6% from 63% last week. Idaho 75% versus 73% last week.

PNW spring wheat has WA at 52% good-to-excellent this week versus 57% LW. ID is Unchanged at 77% this week versus 77% LW.

     National winter wheat condition 49% G-EX versus 47% last week and 38% last year.

     Small changes in crop condition to not add up to enough to move traders.

     The market is weak, headed for the last technical points that suggest support. Chicago has now erased $1.09 off of the July contract in the last 14 trading sessions ending at Monday’s close, which reaches back to April 23 to find previous trading at this level. There is a reasonable ratio plus ordinary support patterns around the $5.76 price level (about 12 cents from pre-dawn trade on Tuesday morning.    

     Chicago July has returned to the 227-session mean line descending from the July 25, 2023 high point, about 30 cents below the 60-day moving average.

     The fundamentals are fragmented and poorly defined, as harvest rolls faster and the northern tier gets enough moisture to confuse the picture.

     The trend is downward. The impulse is to wait for higher prices, but that may take some time to appear. No buy signal here. If an incremental sale is called for in the plan, take it.

Stay tuned.

MarketBullets® Sunday PM, June 16, 2024 : Into the Early Monday Session

     Sunday PM the Chicago wheat market opened on a gap down, and was trading down 9 cents at 6:45 PM. That is lower than the previous low of June 10-11 by 2 cents. If the July contract closes at that level or lower, it will likely stimulate some additional selling.

KC Hard Red Winter (HRW) wheat futures were down about 6 cents, Minneapolis Hard Red Spring (HRS) futures minus 3, and Paris milling wheat was trading down €1.75 per metric tonne (about $.05 per bushel).

     Most of the pressure is coming from a moderating Russian weather forecast, which has some moisture in it and may signal the end of the rapid crop shrinkage trend of the last month. This leaves the global wheat markets in a position lacking a buying mandate.

     The trend is negative , as key chart price zones that had previously represented buying interest are under attack for all three major wheat contracts plus Paris.

     The U.S. Dollar Index is steady, along with the newly ascendant (at least in the news-wires) Ruble/Yuan foreign exchange price. The shift by Russian central banking toward international trade settlements in Russia that exclude the open trading of U.S. dollars on the MOEX (Russian exchange organization) has not come a total shock to the world markets, especially as a new set of sanctions recently applied to Russia were banking-oriented, putting heavy pressure on any nation that trades with Russia to refrain. This issue bears watching, but is not (yet) a key fundamental for wheat.

Stay tuned. We will be back at Noon Monday.

MarketBullets® Friday, June 14, 2024 : Weekly Close                             

     Paris closed out the week below the previous low’s defense line at €238.00, a decline of  €7.00/MT (for the week, now at €236.75 per metric tonne. Paris has been a leading price discovery market in the Black Sea zone of influence, so the price pattern may be suggesting that the “Russian Crop-Damage Show” is about over, leaving the market without a prime, price-positive factor.

     Biggest trade volume day for the week in Chicago was the one big positive day with a 19-cent gain on Tuesday. The volume of trade declined each day after that, with trade ranges successively narrower, suggesting more trade affirmation for the up-day than the flat to negative days following. This may  be a simplistic view, but there are historical validations.

     There is moisture in the short-term forecast for a wide range of U.S. northern tier wheat states. The wheat is looking healthy outside of our back door, and we are entering June with some moisture in the ground, so the potential for “blue wheat” is low.   

     From the Grain Industry Association of Western Australia (GIWA), “Several rainfall events over the last two weeks in Western Australia have ensured crops that were sown dry will germinate and crop that was up will now have at least a chance of returning reasonable grain yields. …we are now on track for at least an average year rather than a well below average year as was the case just a few days ago”

     The big specs are rebuilding their net short-sold positions. Chicago basic large spec positions now an aggregated -25,026 contracts, up from -5,415 in mid-May. This is not a massive position, but there is no gross signal that would be enough to slow the selling down much.

     A summary review at the end of this turbulent week adds up to a fundamentally mild negative. The next 2-3 weeks will be the peak of northern hemisphere market anticipation – if any - of crop shrinkage, followed by a long slide into winter wheat mid-to-late harvest and then spring wheat. The futures market is called that because it must be focused on future potential. That puts the beam on where the harvest results will be distributed; into storage or into the consumer channel. Costs of storage, demand, war, and where the money thinks all this will lead are the factors eligible. The charts will tell us the story.

     The big trend is still positive, but just by a hair or two. We are at an inflection point. It’s a good time to intensify study of the price movements.

This stuff is trackable. Let’s track it!  

MarketBullets® Friday, June 14, 2024 : Pre-Dawn                              

     The Russian central bank has officially adopted the Chinese Yuan as its “benchmark” currency, and will no longer be trading in U.S. Dollars on the MOEX, Russia’s largest trading exchange. The effect on Russian crude oil trade settlements is to force it into interbank channels, a less visible and more expensive venue. This will create a new focus on the foreign exchange markets. One small way this will affect business will be that many buyers of Russian wheat or other goods will now be forced to adapt to conversion of their local currencies to Yuan in order to pay their Russian bills, opening lots of small new doors for trade. Whether this is meaningful to the wheat market is doubtful at the moment, but this will take considerable time to play out in global markets.  

     The Russian Ruble is slowly declining versus the Chinese Yuan, making Chinese purchases of Russian products less expensive. See Ruble/Yuan chart <here>

     The high-low price range in Chicago July wheat contracts on Thursday was entirely contained within that of Wednesday, which was itself contained within the range of Tuesday. Volume of trade has declined each of those days. The market is calming itself (sucking it’s thumb?). The WASDE was not a big influencer of price. The weather is moderating in Russia, but there is still potential drought effect. Harvest is moving quickly in the U.S. as weather is perfect for threshing in HRW country.

     U.S. wheat export sales suck. It is too easy to buy wheat from too many origins to stimulate U.S. sales.

     Rosario Exchange estimates Argentina's wheat production will reach 21 million metric tonnes in 2024/25, a 44.8% increase from the previous year at 14.5 million. It is clear that the new conservative administration is likely to make exports of wheat a greater priority for the first time in a decade or more. There was a time when Argentina dominated wheat export prices like Russia has been lately.

     The big picture is beginning to be more complex. There are large factors on the move, but it is not obvious what will emerge from these tectonics. The trend in wheat is still in a negative slope, with a sloppy pause in progress. If the price fails to hold above recent lows around $6.05, it will be an indication of additional weakness that targets the next potential resting spot around $5.76, a price not seen since mid-April on the way up. On the upside, there is a $6.50 ratio line.

     It is inappropriate to manufacture reasons to expect higher prices at this juncture. Harvest makes wheat move, and every day passing makes the crop less vulnerable to shrinkage due to weather. If interest rates do not come down, the cost of storage will rise, as will cost of capital.    

     Stay tuned. Stay on plan. The coming weeks will require thoughtful and deliberate marketing efforts.

MarketBullets® Thursday, June 13, 2024 : Pre-Dawn

     The WASDE report was a non-event. USDA left the U.S. wheat carryout projection at 688 million bushels. The real number will come on June 28th with the Stocks-In-All-Positions quarterly inventory report. The new crop wheat production estimate was increased 17 million bushels to 1.875 billion, slightly below the average trade guess. The increase was entirely from a better-than-expected Hard Red Winter (HRW) yield assumption. Ending stocks for the new crop year were pegged at 758 million bushels, down 8 million. Old crop global ending stocks were increased 1.76 million tonnes, a less-than-1% cut, but new crop ending stocks were cut an even smaller percentage. So…neutral to positive? There are bigger factors.

     Paris milling wheat commitment of traders report for the week ending June 7 showed a small cut in net long-bought wheat contracts. Suggesting “investors” were more interested in taking profits than getting short.

     There is still some life in the Russian weather-loss horse. An official Russian Grain Union has been quoted that frost hit 15-30% of winter grain. But that was just the setup. It has been the following drought conditions that have damaged the wheat. It is still just talk. How that plays out in actual harvest results will show up in export taxes or quotas later. For now  , it is the only game in town that can still lift wheat prices during an accelerating northern hemisphere wheat harvest. When we see small, incremental adjustments to USDA figures, all well within the boundaries of error and variability, it means that we have no big price adjustments needed.

     If there is a rally in wheat, it will have to come from wider loss-talk from outside of Russia, or just plain technical machinations among the funds. In this environment, 50 cents is a small run, making it really tough for the small, underfunded speculator (endangered species?). The retracement line has held so far, but it is a precarious pattern. Box-o-Rox, 60-day moving average is at $6.18, versus the Thursday Pre-Dawn trade at about $6.23 in Chicago, a slim margin, but one that is back to “hold” for that indicator. The traditional problem of actually trying to apply a moving average as a trading system is that the price frequently will whip back and forth at a key level, giving buys and sells on alternate days. Box-o-Rox is an indicator that is intended as a trend ID that confirms other approaches and is best applied as “hold-or-sell” on already determined selling amounts.

     We need more than a hunch to declare a renewed upward trend, like maybe a 1-2-3 reversal or other pattern of trend-change. These things take some time to emerge. Meanwhile, the downside is probably being muted by a lack of country selling and some renewed enthusiasm among importers, a sleepy U.S. Dollar Index and a lower interest rate chart. There is no buy-signal at present.

Stay in tune, Russian crops are made in June.

MarketBullets® Wednesday, June 12, 2024 : Pre-Dawn/Pre-WASDE & Crop Production

     USDA reports will come out 9:00 AM / 11:00 AM Central Wednesday morning. The market is anticipating the U.S. wheat production numbers to swell slightly from last month’s estimates and the World ending stocks to shrink slightly.

     Very early Wednesday morning trade was low volume, with Chicago and Kansas City both slipping back down about 6-8 cents. Minneapolis spring contracts were off 5-6.

     Heads up on fertilizer prices looking forward. Natural gas represents about 60% to 70% of the cost of production of anhydrous ammonia. The Nat Gas chart is showing some signs of rising after quite a long period of negatives reaching in February to lows not seen since June of 2020. Now the slope is positive, and heat in natural gas country points to electric generation demand.

     Next comment will come after the USDA reports.

Stay tuned, stay cool, take care of bidness!

MarketBullets® Tuesday, June 11, 2024 : Close

     Tuesday Chicago wheat futures turned up 19 cents by the close, erasing Monday’s dismal decline with a closing price just ¼-cent above Monday’s opening trade. The intense daily selling of the last 10 sessions allowed short-term traders to sell aggressively and buy back on Tuesday for a quick profit ahead of USDA’s WASDE and Crop Production reports due Wednesday AM. KC Hard Red Winter (HRW) was up a dime, and Minneapolis Hard Red Spring (HRS) gained 4½ cents. Paris milling wheat contracts gained €7.50 per metric tonne (about $.22 per bushel equivalent). Part of the buying came from a buoyantly active export market, as even Jordan came in for a vessel after being absent since March.  

     The effect of the day’s action validated the retracement line of 61.8% of the previous upward move. The fact that the market was able to reach all the way back to this line in the sand suggests a lack of confidence, but this may become the technical chart backstop and the beginning of a rally attempt. Wednesday’s report and the trade guesses will set the tone if this is to happen. Certainty is in short supply.          

     Egypt’s General Authority of Supply Commodities (GASC) this week has completed the purchase of a total of 460,000 tonnes of wheat from Ukraine, France, Romania and Bulgaria for August shipment – again - for the second week - none from Russia.

     The average trade estimates being batted around ahead of Wednesday morning’s U.S. Crop Production Report for All Wheat are indicating 1.88 to 1884 billion bushels versus the previous USDA estimate at 1.858. New crop ending stocks guesses are about 778 million bushels, with old crop stocks probably unchanged. If the report shows the trade is close with their guesses, the market will move on quickly from the potential volatility that would otherwise erupt if the guesses are wrong.

     The hopes for a renewed uptrend (at least a bounce) are still alive, although it is unlikely to trigger any heavy country movement at current price levels. The big picture is still an upward slope, even with the rather severe test still underway. A failure to remain above Monday’s  Chicago July futures low at $6.06 would be a statement of weakness and require recalibration of chart patterns.

     PNW white wheat is reacting not just to Chicago’s troubles, but also to the improving crop condition numbers for soft white winter.  See previous update below for figures.

Tune in tomorrow for the new USDA results. Good hunting!

MarketBullets® Tuesday, June 11, 2024 : Pre-Dawn

     Winter wheat crop condition as of June 9 showed national Good-to-Excellent rating at 47%, minus 2% from the June 2 figure. For HRW, Texas dropped 6% to 30%, Kansas down 2% to 32%; for SRW, Illinois gained 4% to 77% and Indiana was unch at 79%. In the PNW, given timely rains, Washington is at 48% unch, Oregon jumped 9% to 63% and Idaho gained 5% to 73%.

     Harvest in Texas is about 47% completed. Kansas is test-cutting at 5% in the bin.

     Production in India is slowly increasing, Their government had been considering removal of their 40% import tax.

     The trade is trying to work out where the bounce we are bound to see will originate. The WASDE will preoccupy the market’s attention in the last half of Tuesday’s trade going into Wednesday’s data release at 9:00 AM Pacific/11:00 Central. The general attitude is to expect the now-familiar dichotomy  to continue with slightly rising U.S. and slightly falling global ending stocks. There is still some doubt about Russian wheat estimates.

     The chart patterns have reached some extremes, since after 10 one-sided sessions on the downside everyone is crowded on one side of the boat. The market will be seeking excuses to buy, so if there are surprises they will likely be negative ones, but that is just a WAG. Pre-report trading is always a crap shoot, so the impulse toward short-term profit-taking will be increasing on Tuesday.

     We are at a measuring point. How the price of wheat moves in the next couple of days will set the tone for a while, as the northern hemisphere harvest mutes the urgency among buyers.

Stay tuned to this channel.

MarketBullets® Monday, June 10, 2024 : Closing Brief

      This wheat market does not believe the world needs prices to pull wheat out of the hands of producers, and the last 10 days of trade have shifted cash sales back to “granny” gear. The Russians are still selling wheat. Harvest is speeding up in the Midwest. The U.S. Dollar is not “surging”, but it is relatively firm in its sideways chart pattern. Paris milling wheat contracts settled down about €4.25 ($.12 per bushel equiv). It is too easy to buy wheat. Until that is changed to a less abundant picture, the wheat market is vulnerable to money movement forces, as the funds once again press toward larger short positions.

     The Chicago market stopped for the day directly on one of the last lines of defense for buyers – the 61.8% Fibonacci retracement line, along with a few old supports. If the trade does not give at least a “tip o’ the hat” to this line, the apparent message is that all that talk about Russian frost damage and dry conditions was just that; talk. This can’t be much of a surprise, but it could be taken as a cautionary tale about what kind of manipulative data-flow we can expect from Russia if they get control of Ukraine’s wheat country (that’s a rant…they DID have the driest month of May in 30 years).

     Turkey is dithering a bit about their import ban. They may re-enter the wheat import market at any time, since they have made an effort to appease their wheat producers. This is not a big statistic, but presently is a kind of bellwether. Their timing will be instructive.

      The market is a live beast, wily and independent of what we think it must be. If it doesn’t do what we think (or wish) it ought to, that is because we are missing important data, or we are indulging in wishful thinking. This can be a very expensive bad habit.

     For now, the momentum is negative. Tomorrow we will begin to be preoccupied with the WASDE and Production Reports coming out Wednesday morning at 9:00 AM Pacific Time/11:00 Central. There is considerable pressure on this particular report. With that, along with Federal Reserve meetings and riled-up political circumstances in Paris and Israel, the anxiety levels in the world are up a tid. The name of that game is “Volatility”, which makes options more expensive (or rich, if you are a seller).

     The larger trend is in the balance. It’s time to pay attention. The Chicago daily price settled firmly below the 60-day, Box-o-Rox moving average, so the board has a “Proceed With Catch-up on Incremental Sales” message flashing. It’s only an indicator, but the idea is to be patient with up-trends, and aggressive with down-trends, year-in and year-out.

When we look back at this week, it is likely to be a key point in this year’s market pattern. Stay tuned.

Stay tuned.

MarketBullets® Monday, June 10, 2024 : Pre-Dawn

     The most recent Commitment of Traders Report shows Chicago wheat big specs have renewed their short-sold positions back to -18,121 from -5,415 in mid-May.

     Turkey’s announcement Friday of import bans specifically for wheat from June 21 to October 15th in order to “protect local producers amid price fluctuations” Average annual wheat imports to Turkey have been just over 7 million metric tonnes per year for the last decade, which, if entirely eliminated (unlikely) is about 3.4% of total global wheat export business. It is a small price-negative for current wheat traders; sufficient to make the market take notice, but not enough to cause significant disruption. This kind of announcement smells a little like a government agency head placating some angry producers and trying to influence the global market down a bit.

     The U.S. Dollar Index posted an unusual upside day on Friday, engulfing the previous day-session. The dollar jump was sponsored by a quick yield-surge in the 10-year Treasuries on a strong nonfarm payrolls number for May, leading to ideas that the Fed may delay any rate cuts. This is a good example of “market noise” and a minor move on the longer-term charts…a mild wheat price negative.  

     U.S. wheat harvest is gaining momentum, less likely with every passing day to get interrupted by rain. Yields are slightly above expectations so far.

     Pre-Dawn Monday wheat trade was lackluster after midnight, with Chicago down about 4 cents, KC HRW down about 9, and MPLS spring wheat contracts down 2-3. Indications were that Paris milling wheat, often a market leader, would open up about €2.00 (approx. +$.06).

     The up-trend is troubled, but has not broken major support yet. An appropriate (ratio) bounce from present trade would bring the July Chicago contract back up about 30 cents. A failure to hold above $6.07 would be a display of weakness and could trigger capitulation. It would certainly slow country movement of wheat toward the terminals. Meanwhile, the current trade is about a dime above our Box-o-Rox 60-day moving average at  $6.15, a rude and crude indicator of upward tendency, unless it breaks below that mark.

     ‘Tis just a little test of patience!

MarketBullets® Thursday, June 6, 2024 : Close

     The Agriculture Market Information System (AMIS) is composed of G20 members plus Spain and eight additional major exporting and importing countries of agricultural commodities. As of June 6, their estimates of wheat production yielded the following: 

• Wheat production in 2024 falling fractionally below (0.1 percent) the 2023 level. Potential output declines in the EU, Türkiye, the UK and Ukraine, to be offset by increases in Australia, Canada, India, and the US.

• Utilization to contract by 0.8 percent in 2024/25, stemming from lower feed and other use, mostly concentrated in China and India.

• Trade in 2024/25 (July/June) forecast to decrease by 1.2 percent, driven by lower import demand from China and the EU, along with smaller exports from the Russian Federation, Ukraine, and Türkiye.

• Stocks (ending in 2025) predicted to decline by 1.6 percent below opening levels, largely due to a significant drawdown in the EU, along with smaller decreases in Kazakhstan and the Russian Federation.

AMIS is one of several global entities tasked with monitoring agricultural statistics. Some others are USDA (NASS, ERS and FAS), International Grains Council (IGC), Food and Agricultural Organization (FAO). This is not a comprehensive list, but a few of the most recognizable .

     The First technical support in Chicago July futures at 38.2% retracement of the full upward move since the first week of March didn’t even slow the negative momentum. That has created a string of 9 negative trading sessions in a row and an 88-cent air pocket. We are looking at -50% of the total upward shot at this point. The next point at which to expect the market to be at least moderately sensitive is the 61.8% line at about $607. The market is expressing weakness and reflecting some real country movement of wheat that had been hold for many months. That is sure to abate soon, even the “easy wheat” that always gets sold in the first weeks of harvest to pay bills.

     Any weather report that shows Russian still in drought trouble will impact this market quickly, so volatility is bound to be our constant companion for some time yet.  Its going to get hot this week in the PNW and across the Midwest, turning green wheat gold as it pushes the harvestable wheat line north.  

     The intermediate-to-longer-term trend is still defined as positive, but the margin of error on that determination is shrinking fast. A failure of the 61.8% line (another 25 cents below Thursday night trade) would be a sign of market capitulation and abundance of wheat for sale in the world. That is within radar range.

Stay tuned. Stay loose and ready.     

MarketBullets® Wednesday, June 5, 2024 : Pre-Dawn Update

     Wednesday pre-dawn trade in all three U.S. wheat futures contracts traded in a narrow band until just after 3 AM PDT when they began to fade, down 3+ cents by 3:20.  That puts Chicago within easy trading range of the obvious support line at about $6.50. Wednesday may prove to be a challenge for the defenders of that 38.2% retracement line. Chicago July has dropped 45 cents from the 10-month high close at $7.00 on May 28.  

     Texas and Oklahoma have been finding higher-than-expected yields.

     Paris Milling Wheat has lost its mojo over the last 4 trading sessions. The front month contract (September) has closed within a €.75 ($.02) range every day since last Thursday May 30. This contract is the most representative of European milling wheat, including Russian and Ukrainian.  

     In its latest international tender, Egypt bought 470.000 metric tonnes of wheat, none of which was from Russia, a change in pattern for Egypt, the world’s largest importer of wheat most years. Romania, France, Ukraine and Bulgaria had the successful offers.

     Australian wheat is a long way from the bin, but the forecast from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) June Australian Crop Report is for 29.1 million metric tonnes of wheat to come out of this crop year on a 3 percent increase in wheat planted area.  

Queensland and New South Wales are expected to produce a large wheat crop, even as Victoria, South Australia and Western Australia decline slightly.

     The market is still in an uptrend according to the orthodox definition. The way that this market behaves in an encounter with the big technical support lines at $6.50 and then $6.28 (5 to 27 cents below pre-dawn Wednesday trade) will reveal what kind of longer-term strength is present.

This stuff is trackable. Let’s track it!

MarketBullets® Tuesday, June 4, 2024 : Pre-Dawn Update

     The primary fundamental driver for the wheat market is Russian crop losses to maturing wheat, starting earlier this season with frost damage, followed now by dry conditions that do not allow large regions of Russian wheat production to recover. It is not beyond the Russians to overstate such statistics to promote higher prices, as the global markets have no easily available way to verify, but there are rumbles that there will be more official reductions in production estimates.

     The U.S. Dollar Index is sliding downward into the middle of its 18-month trend channel, not a trend change, but a mild price positive for global wheat sales. The Chinese Yuan is steady-to-weaker, trading near its weakest levels since 2008. The Russian Ruble is gaining incremental strength versus the dollar. When crossed with the Chinese Yuan, the Ruble is steadily gaining strength, making wheat sales to China more costly when expressed in Yuan.

     The wheat price trend as expressed in the bellwether Chicago Soft Red Winter wheat futures is positive, but has encountered some selling at current levels. If the sellers are persistent, the short-term movement will tend to be negative, but it will require considerable declines to break the trend Channel. Longer-term prices will be based on harvest results due in the next 60 days.

     The People's Republic of China (PRC) and Russia reportedly disagree about economic issues such as the proposed Power of Siberia 2 (PS-2) pipeline despite publicly portraying themselves as diplomatically aligned. See article <here>.

https://understandingwar.org/backgrounder/ukraine-conflict-updates

MarketBullets® Monday, June 3, 2024 : Grains Closing Update

     Chicago July contracts traded a wide range, with a high well above the highs of the last couple of sessions, very near the magical $7.00 level and then the lowest close since May 20. KC Hard Red Winter (HRW) and Minneapolis Hard Red Spring (HRS) did nearly the same pattern. The market apparently ran into some willing sellers, probably some of whom were producers. The wheat trend is still upward, but is contending with some available supply that had been holding for a few weeks, plus early harvest sales (the “easy” wheat). The support is still crop shrinkage in Russia.  

     Intermediate technical support shows on the Chicago wheat futures charts as $6.50 (the lows of mid-May).  

     PNW winter wheat crops reflecting good-to-excellent ratings: WA 48% versus 48% last week. OR 54% versus 59% last week. ID 68% versus 67% last week. National winter wheat 48% versus 49% last week and 36% last year.

Spring wheat condition in WA 56% good-to-excellent, 55% last year. ID 72% versus 57% last year. North Dakota 80% G-Ex versus 67% last year. Montana 56% versus 58% last year.

     Corn and beans still punching out new recent lows.

     Diesel is seeing new lows (click <here> for chart and data.

     Short-term (2-Year Notes) interest rates are declining, reflected in higher note prices (Click <here> for chart.

     The trend is still positive, with current consolidation and correction underway. The fundamentals still are supportive, but wide price swings are expected.

Stay Tuned. Stay on plan.

MarketBullets® Monday, June 3, 2024 : Pre-Dawn Update

     The week just ended on May 31 was a negative net for wheat and other grains as well. The month-end results were still quite positive. See the weekly and monthly Summary below. Monday pre-dawn had Chicago wheat up 8-9 cents, KC up 6 and Minneapolis up 7-8, setting up a positive day-session start.

     Harvest in Kansas is rolling. The south and southeast soft red winter wheat is also coming in.

     The world is apprehensive about available wheat supplies going forward, a reflection of historically tight global stocks. With northern hemisphere harvest in its early stages when crops start to be measurable, the market is not under short-term stress, but there is vulnerability still for green wheat in the mid-to-northern tiers of latitude.

     The charts show the tone has not changed since the new upward trend was initiated in the first week of March, now 60 trading days old. As of Sunday PM heading into the new week, the Chicago price of wheat was trading right on top of the 60-session positive mean line, a position of confidence.

     The Russian Ruble has been strengthening (Rubles per USD falling) for 7 weeks, not yet to any new value out of the year-to-date range, but will be threatening the low side, as it rides down the negative slope of its 9-month price mean. Ordinarily this would mean their wheat is getting more expensive, but they have not been using any conversion to the U.S. Dollar to price their wheat sales of late; something about sanctions…  In the last 60 days the Russian Ruble has been getting progressively more expensive in Chinese Yuan terms, making their wheat prices rise to their best customer, even as their quality has come into question. This story line bears following.

     The trend in wheat is still upward, although there have not been any dramatic, impulsive sessions since May 20-22, when Chicago gained 50 cents in three days. If the pattern that has sustained the longer move is to be continued, we should be expecting some more upside soon. If not, and the market sags back lower, the downside target of a 38.2% ratio retracement is still some 60 cents below Monday pre-dawn trading levels. It takes quite a bit of patience to hold against such a dip, especially as harvest looms. There is sufficient justification to release an increment of wheat into the maw of the market here (particularly old-crop), but there is still upside potential, if one has the stomach for the ride.

Stay tuned for more of the saga. Good hunting.