Wheat Is Flying

[melvill]

Just to echo Charlie's comments about caution on this wheat bull run. I had two phone calls today from bulled-up producers talking about $8.00/bu. wheat total payment delivered at the the local elevator. When I hear that kind of bullishness together with stories in the mass media - CBC and National Post - about how high wheat prices are, I worry about producers' marketing strategies. The last two days look like a very big blow-off to me getting ready for "the" a very large correction or a correction headed for a double top. The two producers I talked to haven't priced any wheat. One was waiting to lock in $7.50, the other for $8.00!!!

What do you think? Is this the big blow-off before the hard down turn or is it the first leg of a double top?

[Incognito]

In 10 days we took out the old high at the CBT, $8.00 and now the line intersecting the 70'sand 90's high at $8.52.

There is not enough wheat stocks and production is going south everyday.

Chart that.

[charliep]

No doubt things look positive (if western Canada can only put the 2007 crop in the bin with reasonable quality). Two experiences are keeping me honest.

Crop year 2002. The year of extreme optimism in the fall and a deficit in the 2002/03 CWB wheat pool account. Remember the fall of 2002 where the sky was the limit only to find out expensive wheat changes the dynamics of the market in many ways. Realize Ukraine and Russia don't have the wheat crops they did in 2002/are not issuing export licenses but suspect there will be a point they sell.

Corn in 2007. Watching corn top out over $4/bu and then slip to today's levels. Again realize will be spill over from wheat into feedgrains but the market responded with vigor in filling the supply gap created by ethanol. No crystal ball but I suspect there is no where on the planet that will not be growing wheat. Mother nature needs to cooperate but that is every year.

[Incognito]

CBOT wheat at $9.00 tonight Charlie.

The fat lady isnt even in the dressing room yet.

[charliep]

You are likely right. Will note the old/new crop spread is currently $3/bu with July barely moving.

Went back to 2002 and see the high was in September. Took a look at 2004 and saw similar the rally hold through the winter. Neither of these years had the same level of tightness.