Wheat Fundamental Support
Hard Red Winter Wheat regions are still under a barrage of cold weather and wind chill warnings. Kearney, NE reported temps as low as -19 over the weekend. The consistently low temperatures and lack of snowfall has traders firming their positions on wheat and the continued concern for winterkill. Funds bought 7,842 contracts last week reducing their net short position to 145,735.
The trade is gearing up for the four USDA reports set for release on Jan. 12. The Annual Production Summary revises all 2017 planting, harvested, yield and production numbers. The quarterly Grain Stocks report updates the trade on stock levels after one quarter of use on December 1. That tells the market about demand in the first three months of the year. The fourth report is the first official new crop report of the year, Winter Wheat Seedings. The trade will take this information and adjust its views of 2018 acreage. USDA will not issue any official 2018 numbers on the monthly reports until May.
2017 wheat prices finished higher overall. On Dec. 30, we analyze the difference between the March 2017 and 2018 closing price.
Chicago Wheat: + 5% | KC Wheat: + 2% | MN Wheat: + 15%
As we usher in 2018, a boost in exports and volatility would be a welcome sign. Our Outlook Conference will discuss the 2018 Wheat Outlook on Jan. 24 to help out producers and end users alike. Wheat was able to see an annual gain for the first time in five years. Is this a sign of an undervalued market finding demand? We know that our exports are behind schedule but the USDA could modify the balance sheets on Jan. 12. With such frigid temps, the reality of winterkill is likely. We also know that 80% of the yield will be determined by March and April rains. Where we go from here seems to rest on the laurels of cold cold cold weather risk for the short term.