Wheat

[farmaholic]

WTF..... looks like MGEX wheat is on it's death bed taking it's last breaths. Where is support(as simple as a support line would be, I don't do chart analysis). Kansas wheat has turned but kinda leveled out but why is MGEX lagging so bad? I thought Px was king....and MGEX is the hard wheat with Px market, isn't it?

Anyone have any recommendations for an interactive chart website.

[bucket]

International tenders don't need MGEX ...they just need bids and the lowest gets it. Much like having a pile of TPAs to pick and choose from.

Russia doesn't need MGEX to sell wheat.

Who is currently kicking our ass in the wheat trade?

Does that clear it up?

[farmaholic]

.........so according to the Bollinger Bands and RSI, the market should turn soon?

But what about that long term trend down, can it break it and turn meaningfully higher?

Fundamentals????

[Agvocate]

MGEX is losing it's premium to the other wheat's. It's still historically high, $1.30 premium to KC and $1.50 premium to Chicago, (based on May contracts) but as more of the cash protein market is satisfied the less of a premium it commands. I don't know the exact long term average premium MGEX is over the other 2, but believe it's close to 50 cents. In those terms protein is still getting a large premium over the lower pro winter wheat contracts but it's well off the high's from the fall.

[bucket]

there is an old proverb....trade in wheat sleep on the street...

Seems everyone wants to sell price protection....sell being the key word. It costs something.

I am no market anything but if the trade was being done by the markets ...why do countries issue international tenders for their needs?

And how does it get reflected in the market once the tenders are public?

[farmaholic]

I am not going to take any positions in the market, other than being long physical, am not going to be buying any price protection either. Just want an understanding. When you look at the trading charts, its interesting to see the history(hindsight being 22/20). Unfortunately, there is no clear window to look through into the future with. I find the analysis interesting as well but it drives me nuts that marketing decisions are made and markets move based on chart analysis versus fundamentals...

Someone tell me if I am wrong.

Maybe the fundamentals, of the S&D and S/U, are the base but the rest is speculators moving the market based on chart analysis.

There are afew AVers who seem to understand the Futures Market and the nuts and bolts of it very well....please chime in. Let's have a marketing thread in the Commodity Forum.

[TASFarms]

I believe fundamentals have very little to do with today's futures. To many computers trading off algorithms.

[farmaholic]

So my simple abacus mind is supposed to out trade an algorithmic computer program....

Get the picture....this is a battle I am unarmed for!

🤔

[bucket]

Buy a better computer...is that the right answer?

I have upgraded to the equivalent of a hamster wheel in my head...always turning...and knowing full well the russians are kicking our ass out of the wheat market and soon everything else...because ag has value there .

[farmaholic]

Maybe it's not about beating the market but heeding the signals.

Why doesn't anyone challenge my uneducated opinion.....don't be afraid of the ranting lunatic.

I just don't know if I would do any better than what I'm doing today....well, maybe in some cases like locking in prices on a crop I haven't seeded or harvested yet.?.

[Agvocate]

This has branched off in a few directions but will throw out my opinion on a few items:

MGEX - $6.00 has held in the nearby recently. Technically a close below that level can open up more room for downside, if the spread to KC and Chicago continue to narrow and your local elevator protein spreads narrow in, tells me the market has enough protein for the time being. If all that continues not a whole lot of reason to be bullish spring wheat. Wheat rallies are meant to be sold until I read at least one article that suggests supply is tightening overall.

Funds/Computers/Algo's - Like a lot of things I comment about, you don't have to like that they exist, but you have to deal with the fact they do. Most of the attention paid to funds by producers or on any of these threads is when they are record short and seen to be driving price lower than fundamentals would suggest. Realizing the opposite is also true when they are long is opportunity. If you believe futures have been pushed 50 cents to low at times, they probably have been pushed 50 cents too high as well.

If you can remove the emotional attachment to what you produce and just look at a spreadsheet of returns you are likely to make a better decision regardless of your understanding of futures, technicals, algo's etc.

[farmaholic]

Thanks Tasfarms, Bucket and Agvocate..... so far.

[farming101]

MW is a predominantly North American focused market. Bottom line is the market is supplied. The US is conserving its supply of HRS for domestic use and doing a great job.US exports including future sales on the books are sitting at less then 73% of last marketing year.
Other areas of high protein production are Australia, Russia, Ukraine, Kazakhstan

Canadian sales into the US market are much higher than last year. Movement from Sask for example, is up 40% from last year Aug-December period.
North Dakota prices for 14%px are up 12% from May 17. Canadian prices are steady to lower over the same time period because the CAD was in the basement last May, CN's 2017-18 grain program has come up way short on what is required, there was an increase in total rail traffic beginning in August and the overall protein content of HRS this year is down substantially and could be called a multi year low. In a year when the world wheat market is well supplied having lower protein wheat is very bad. Price is everything.

The World market for Canadian high protein wheat is limited. There is no country in the world that takes a large percentage of their wheat import needs solely from Canada, save one. The US. There is competition in every market from around the world. Canada cannot compete with bumper crops from Russia.

Indonesia, recently named the largest wheat importer in the world imports about 16% of their needs from Canada. While unscientific it would suggest that their mills blend to get the quality they need with that amount.

Positive is that Canadian wheat still commands as high a price as anywhere.
Negative is that old crop wheat needs a shot in the arm. First would be to get some ships loaded. 14 incoming on the west coast this week. To clear 14 this week would be a miracle(sunny today, 2 terminals aren't even loading?). Thus it's likely that the ship count is going up.
Any bump in values for old crop will be spilling over from Kansas wheat problems. The increase would be muted but could amount to 40 or 50 cents. Next up is the prospects for HRS areas. Right now conditions are dry and everyone knows it. We could see a repeat of last summer's price runup very easily and it would happen earlier.
Watch new crop. It is a very different set up than old crop.
Might be as soon as early April out till early May. Doubt too much will happen before then. The Kansas spillover could happen by then but may get partially absorbed by basis if logistics don't get better. I think the risk of lower values for the next eight weeks is small(8-10 cents US)

Agvocate-here's your article(a little dated): https://agfax.com/2018/01/25/wheat-market-global-supplies-of-high-protein-wheat-keep-tightening/ https://agfax.com/2018/01/25/wheat-market-global-supplies-of-high-protein-wheat-keep-tightening/

[Agvocate]

101: Well written, appreciate the post. Would love to see a sustained rally in wheat, but selling minor weather scares has proven a good strategy thus far. The time I am wrong and it continues higher, just hope my previous sale wasn't the last bin I had for sale.

[farmaholic]

Thanks 101, lots of food fòr thought, off the charts 👍