Wheat: The wheat market closed the month on a positive note as a rally in the corn market and end-of-the-month fund buying propelled the market higher. New news to trade on Monday was limited so the market pretty much played follower. As the corn market rallied, it pulled the wheat higher. Wheat is being fed to livestock as a substitute to high price corn so when the corn rallies, wheat will rally to stay competitively priced.
Funds buyers were active as we closed the month out. They were estimated to have bought 4,000 contracts on the day. Volume was good as as we traded 5,700 July wheat contracts in the final minute of trading alone.
The trade will be watching results from this week’s Kansas wheat tour that starts on Tuesday. With all the moisture that has fallen in the plains recently we are expecting the tour to see a great crop. The current thought is the Kansas wheat crop should fall in the 400 to 457 million bushel range. This is a huge increase from last week’s 277 million crop. Monday’s crop ratings continue to be impressive as 64% of the crop is rated good to excellent, up 1 percentage point from last week. This is well above last year good to excellent rating of 34%.
The crop not only looks good is also off to a fast pace. As of Sunday, 54 % of the winter crop has headed out compared to 24% on average at this time of year. The spring wheat planting continues at its ferocious pace. We have 74% of the crop planted compared to the five-year average planting pace of 32%. Emergence of the spring crop is ahead of pace as well with 30% of the crop emerged compared to the five year average of 8% emerged for this time of year.
The commitment of traders report was viewed slightly friendly as the funds lessened their short position by 11,352 contras. This still leaves them short 44,198 contracts. Allendale continues to have a bearish view of the wheat market. The only concern we have with getting overly bearish is the massive short that the funds are carrying. If the funds decide to lighten up on this position, it would most likely cause the market to rally. We would recommend hedgers take advantage of rallies to price out some wheat…Jim McCormick