Take note of the very last paragragh in the article.
For those of you who still don't understand why the Americans have been fighting the CWB for all these years, the last paragraph explains all you really need to know.
The Americans know the prices that wheat business gets done at. The prices of wheat deals are not stae secrets in the states like they are up here in Canada, and the Americans have seen too many times the CWB use it's monopoly powers to undercut the market and stall any wheat price rallies from happening. They want us to sell for higher prices, they are not envious if we do because if the cwb gets good prices, world prices stay up, but when the cwb undercuts, thats the trigger for world wheat prices to stall and then fall to the cwbs lowball prices.
Wheat market exhibits post harvest price rally
By MARK CONLON, Editor
Thursday, October 12, 2006 1:05 PM CDT
The U.S. spring wheat market rallied in late September and early October following this year's harvest. The question is how long will it last.
“The market continues to show a propensity to rally off of the harvest lows,” said Jim Peterson, marketing director for the North Dakota Wheat Commission. “The big question though, is how much staying power does it have?”
Peterson said there are a lot of bullish factors supporting the market, including a small world wheat crop and tight U.S. wheat stocks. Also, competing commodities such as corn are helping to boost wheat prices in deferred positions.
“Much of the recent uptick in prices is due to renewed speculative buying,” he said. “(The speculators) look at the big picture, the overall wheat situation, which is drawing their interest.”
Weighing against that and causing some volatility in the market is a slow U.S. export pace, according to Peterson. Higher prices in the U.S. were creating export opportunities for competing countries, but a tightening world situation is bringing world prices up as well.
“We were gapping against world prices, but now we're pulling world prices with us,” Peterson said.
Also weighing against the market is 2007 crop prospects. Already there is lots of talk in the industry of increased winter wheat planting taking place in the U.S. and European Union. India, China and Russia will likely increase plantings as well, Peterson said.
Some analysts are also forecasting ahead to next spring and what spring wheat acres will be.
“At this point, though, it's all just conjecture,” Peterson said.
Nearby prices for spring wheat in the region were ranging from $4.05 to $4.50 with an average around $4.30. That's up about 35 cents per bushel from the mid September lows following harvest. The price is still below the peak in July, but the market still shows good strength, according to Peterson.
New crop bids for 2007 have come in between $4.20 and $4.50.
“A lot of that is being pushed by bids for corn acres in 2007 as many are anticipating more corn acres for ethanol production,” Peterson noted.
Peterson said corn and wheat are traditionally linked together. Wheat, he said, usually is $.80-$1.20 higher than corn, but premiums on the futures market are currently over $2.
“There's a lot of debate about what's causing that,” he said. “Some feel the spread can't stay that wide that long and feel corn will have to move higher in the short run. What happens long-term is what's raising more questions. If corn moves higher to compete - will that be even more beneficial to wheat?”
December 2007 corn is presently at $3.10 and December 2007 wheat is $4.80. Since mid September Chicago has had the most price grain at more than a dollar for December futures while Minneapolis and Kansas City have increased about 75-80 cents. Peterson said more speculative buying in the Chicago market and strengthening world prices is why that market is doing better.
“Deferred wheat futures are unusually high and it's being pushed by ethanol's demand for corn,” Peterson said. “Wheat is getting a carryover benefit from that - not so much on nearby, but on deferred futures.”
Analysts are also speculating that wheat acres will be up significantly in 2007, but there needs to be evidence of demand to move some of the crop from this year andsupport nearby prices, Peterson noted.
U.S. export sales of all wheat classes as of Sept. 28 stood at 387 million bushels - down 23 percent from last year's pace of 505 million bushels at this time. USDA<p>had projected only an 11 percent decline.
The U.S. recently captured an 11 million bushel sale of hard red winter wheat to Iraq. Last year at this time the U.S. had already sold Iraq 37 million bushels. Egypt also bought 4 million bushels of soft red winter wheat unexpectedly.
“Prices are getting competitive in the world market,” Peterson said. “The fact that they're buying while prices have rallied is a positive sign that stocks are tightening.”
Stats Canada's latest crop estimate was right in line with estimates, coming in at 966 million bushels. Early July estimates were at 955 million. Australia's wheat crop is expected to be about 250 million bushels less than last year with this year's estimates below 650 million bushels with some analysts projecting production could go as low as 450 million. Last year Australia produced a 900 million bushel wheat crop. The EU crop is also projected lower - 4.4 billion bushels compared to 4.5 billion a year ago.
Combine that with total wheat production in the U.S. at 1.812 billion bushels compared to 2.1 billion last year and you have world wheat stocks tightening.
Looking at exports, U.S. sales of hard red spring wheat are off 19 percent from 2005 with 120 million bushels sold compared to 148 million at this time last year. USDA had only forecast a 6 percent decline.
Still, hard red spring is doing better than hard red winter which is off 60 percent from last year with 95 million bushels sold to date compared to 227 million bushels at this time last year.
“Overall producers are pleased to see the current market rally,” Peterson said. “We'll have to wait and see how much staying power it has. Some feel it can still gain a significant amount.
“For hard red spring wheat Canada is the big question mark,” he continued. “Their crop is a little higher grading this year so hopefully the (Canadian Wheat Board) tries to get some higher prices as well and keeps pressure off the market.”
For those of you who still don't understand why the Americans have been fighting the CWB for all these years, the last paragraph explains all you really need to know.
The Americans know the prices that wheat business gets done at. The prices of wheat deals are not stae secrets in the states like they are up here in Canada, and the Americans have seen too many times the CWB use it's monopoly powers to undercut the market and stall any wheat price rallies from happening. They want us to sell for higher prices, they are not envious if we do because if the cwb gets good prices, world prices stay up, but when the cwb undercuts, thats the trigger for world wheat prices to stall and then fall to the cwbs lowball prices.
Wheat market exhibits post harvest price rally
By MARK CONLON, Editor
Thursday, October 12, 2006 1:05 PM CDT
The U.S. spring wheat market rallied in late September and early October following this year's harvest. The question is how long will it last.
“The market continues to show a propensity to rally off of the harvest lows,” said Jim Peterson, marketing director for the North Dakota Wheat Commission. “The big question though, is how much staying power does it have?”
Peterson said there are a lot of bullish factors supporting the market, including a small world wheat crop and tight U.S. wheat stocks. Also, competing commodities such as corn are helping to boost wheat prices in deferred positions.
“Much of the recent uptick in prices is due to renewed speculative buying,” he said. “(The speculators) look at the big picture, the overall wheat situation, which is drawing their interest.”
Weighing against that and causing some volatility in the market is a slow U.S. export pace, according to Peterson. Higher prices in the U.S. were creating export opportunities for competing countries, but a tightening world situation is bringing world prices up as well.
“We were gapping against world prices, but now we're pulling world prices with us,” Peterson said.
Also weighing against the market is 2007 crop prospects. Already there is lots of talk in the industry of increased winter wheat planting taking place in the U.S. and European Union. India, China and Russia will likely increase plantings as well, Peterson said.
Some analysts are also forecasting ahead to next spring and what spring wheat acres will be.
“At this point, though, it's all just conjecture,” Peterson said.
Nearby prices for spring wheat in the region were ranging from $4.05 to $4.50 with an average around $4.30. That's up about 35 cents per bushel from the mid September lows following harvest. The price is still below the peak in July, but the market still shows good strength, according to Peterson.
New crop bids for 2007 have come in between $4.20 and $4.50.
“A lot of that is being pushed by bids for corn acres in 2007 as many are anticipating more corn acres for ethanol production,” Peterson noted.
Peterson said corn and wheat are traditionally linked together. Wheat, he said, usually is $.80-$1.20 higher than corn, but premiums on the futures market are currently over $2.
“There's a lot of debate about what's causing that,” he said. “Some feel the spread can't stay that wide that long and feel corn will have to move higher in the short run. What happens long-term is what's raising more questions. If corn moves higher to compete - will that be even more beneficial to wheat?”
December 2007 corn is presently at $3.10 and December 2007 wheat is $4.80. Since mid September Chicago has had the most price grain at more than a dollar for December futures while Minneapolis and Kansas City have increased about 75-80 cents. Peterson said more speculative buying in the Chicago market and strengthening world prices is why that market is doing better.
“Deferred wheat futures are unusually high and it's being pushed by ethanol's demand for corn,” Peterson said. “Wheat is getting a carryover benefit from that - not so much on nearby, but on deferred futures.”
Analysts are also speculating that wheat acres will be up significantly in 2007, but there needs to be evidence of demand to move some of the crop from this year andsupport nearby prices, Peterson noted.
U.S. export sales of all wheat classes as of Sept. 28 stood at 387 million bushels - down 23 percent from last year's pace of 505 million bushels at this time. USDA<p>had projected only an 11 percent decline.
The U.S. recently captured an 11 million bushel sale of hard red winter wheat to Iraq. Last year at this time the U.S. had already sold Iraq 37 million bushels. Egypt also bought 4 million bushels of soft red winter wheat unexpectedly.
“Prices are getting competitive in the world market,” Peterson said. “The fact that they're buying while prices have rallied is a positive sign that stocks are tightening.”
Stats Canada's latest crop estimate was right in line with estimates, coming in at 966 million bushels. Early July estimates were at 955 million. Australia's wheat crop is expected to be about 250 million bushels less than last year with this year's estimates below 650 million bushels with some analysts projecting production could go as low as 450 million. Last year Australia produced a 900 million bushel wheat crop. The EU crop is also projected lower - 4.4 billion bushels compared to 4.5 billion a year ago.
Combine that with total wheat production in the U.S. at 1.812 billion bushels compared to 2.1 billion last year and you have world wheat stocks tightening.
Looking at exports, U.S. sales of hard red spring wheat are off 19 percent from 2005 with 120 million bushels sold compared to 148 million at this time last year. USDA had only forecast a 6 percent decline.
Still, hard red spring is doing better than hard red winter which is off 60 percent from last year with 95 million bushels sold to date compared to 227 million bushels at this time last year.
“Overall producers are pleased to see the current market rally,” Peterson said. “We'll have to wait and see how much staying power it has. Some feel it can still gain a significant amount.
“For hard red spring wheat Canada is the big question mark,” he continued. “Their crop is a little higher grading this year so hopefully the (Canadian Wheat Board) tries to get some higher prices as well and keeps pressure off the market.”
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