Wheat: Monday's wheat trade could be best described as boring as the market consolidated before the day's planting and crops ratings report as well as Thursday’s WASDE report.
Outside markets did pressure the market a bit early as the election results out of France and Greece pressured the euro and supported the U.S. dollar. The election results did not just affect the world currencies, but it also led to a risk off mentality across most of the commodity sector.
As for Thursday’s WASDE report, the average trade guess is for old crop ending stocks to come in at 778 million bushels. This is down from last month’s estimate of 793 million bushels. As for the new crop the trade is looking for ending stocks to be 782 million bushels.
Monday night’s crop progress report showed that spring wheat planting is continuing to progress at a fantastic rate. As of Sunday, 84% of the spring wheat had been planted and 47% of the crop had emerged. Last year at this time only 49% of the crop had been planted and 17% of the crop had emerged. The winter wheat continues to look good as 63% of the crop is rated good to excellent. Last year at this time on 35% of the crop was rated good to excellent. The crop continues to progress at a near record pace as 63% of the crop has headed out compared to 34% on average for this time of year.
Allendale is anticipating new crop ending stocks to come in at 916 million bushels. This would give the U.S. a stock to uses ratio of 41%. Our economic models suggest that this stock to use ratio puts economic value of wheat for cash wheat at $5.75. Futures could slide to $5.20 later in the marketing year. Allendale continues to have a bearish view of the wheat market. For this reason, Allendale continues to recommend hedgers take advantage rallies and sell wheat as we are anticipating the wheat market will make an addition leg down into harvest…Jim McCormick