Wheat, is there going to be a crop?

[TOM4CWB]

I just heard that the awned wheat flowers blasted that was flowering during the dry weather.

Wainright, Lloyd, Sedgwick has a bad Wheat midge outbreak!

Not enough spray planes to go around!!

Diamond Back Moths are getting the Canola too, at the same time!!!

Anyone else got some good news?

[crusher]

TOM4CWB,
I was a seller on Tuesday. Started selling new crop peas @ $4.50 for yellows and sold some CPS in the bin for $3.78, wheat that I was going to deliver on my CPS contract on to a FPC that I only have basis on. I'm going to play with the last 15% of my contract for another 10 days but the board will probably get it now with the crap out in Winnipeg futures yesterday. I sold some new crop feed wheat November delivery for $3.84. Like you have I've got some of the knee high headed out CPS that looks awful. My HRS is half good, half bad, peas look OK, my Invigor looks good, RR looks average and my barley looks average.

[TOM4CWB]

Wheat Midge in Sherwood Park!

Last nite I found orange blossom wheat midge in my CWES Wildcat and CPS Red Crystal Wheats!

It is not quite to threshold spraying levels yet, but the little orange midge flies are at Edmonton this year.

Late CPS is likely the most at risk on our farm.

[charliep]

Keep us posted Tom. Anyone else seeing these problems?

Wheat is going to be an interesting crop in the year ahead. Better than expected US winter wheat crops and lacklustre US export program are keeping prices under pressure with recent moves more reflecting what is happening in the soybean and corn pits than wheat fundamentals. Production problems here in Canada/other parts of the world combined with a tightening world situation have potential to make life interesting this fall/winter.

Ideas for market strategies include:

1) Make use of the CWB wheat basis contracts to position yourself to take advantage of fall rallies. Currently about $20/t over the converted MGE Dec. futures contract. You have until the end of July to sign up with the basis potentialy changing on July 26 (next PRO).

2) I think there will be some opportunites to buy wheat calls as an investment strategy (maybe pocket some of the price gains from crop you would have liked to have harvested if a drought hadn't cut back yields). I would be patient until this market provides clearer signals that it is ready to move higher.

Others thoughts.

[sewen]

Just checked for diamond back moths, found 6-9 per plant believe the threshold is 2.

I am just north of the hot spot for wheat midge but havent found threshold levels.

As for the weather here not much has changed only received 1 to 2 tenths last weekend North West of Lloydminster(Dewberry, AB). Things are starting to go down hill fast.

[TOM4CWB]

Charlie,

Your Wheat Call idea is a good one, if my memory serves me correctly, the end of August is usually the seasonal low for wheat.

Now if drought starts taking the American market higher, then this seasonal low could be as soon as the Hard Red Winter Wheat is finished being harvested!

I think this year in about a week the majority of this harvest, plus the Chicago winter wheat will be mostly in the bin.

Canola is usually in the "tank" right now, but have we turned the corner into a demand led bull market?

[charliep]

Tom I would be carefull in calling the recent lower prices tanking. Canola has only been above $350/t for 3 days with Fri. close at $342. I like to look at a chart to have some respect for the fact the market was trading $290 to $310 just a month ago.

Lower production potential relative to our customer base has put tension in canola prices but most of the last rally has been related to concerns about the US soybean crop. A market like this will be make another major move Monday depending on this weekends weather in US midwest(too hot/dry - up 20 cents/bu higher, favorable - down 20 cents). Current prices are very signals for South American soybean farmers to increase acres.

You mentioned the demand side so I will highlight briefly.

1) Meal depend has been very strong but has been mainly related to increased consumption/imports from China and to a certain extent N. Amercia. My of the rest of the world is actually seeing reduced consumption/imports with reduced livestock numbers in Europe/less used in rations the main example. Weather problems in N. China are impacting their soybean production. The question ahead is whether the world will grow soybean supplies faster than Chinese demand. Warning signs remain here with soybean prices closer to $4/bu than $5 a potetial reality.

2) What is going on with international vegetable oil prices? We moved CBOT soybean oil prices (Dec. contract) from 15 cents/lb to just under 20 cents and since has slipped to under 18 cents. Have the super low international vegetable oil prices stimulated demand to the point where we can hold prices at higher levels than over the past year? Will the US find a home for their monsterous soybean oil stocks (a buy product of crush to satisfy meal demand)?

3) With world soft seeded oilseeds crops like sunflower and canola production way down, how much of a premium can canola oil demand over other vegetable oils? This factor will be critical for our domestic crushing industry over the coming year.

My strategy is a really balanced scale up selling program with rallies over $350/t futures being rewarded with at least some sales. You are likely right that you can buy calls on dips but I would be patient unless you are a poker player or need to take an action like to give the confidence to make a cash sale.

Others thoughts.

[TOM4CWB]

Charlie,

Good points on Canola, but what about wheat?

In the spring, everyone was talking about wheat's big bull rally!!

Since then it has just gone down!!!!!

I cannot further price wheat unless I do it against calls, as I cannot speculate and sell anymore, the risk of short production is too high!

In the wheat that emerged after the May 30th first rain, and the wheat seeded after May 10th, filling is not far enough advanced to see how many heads blasted, there are a percentage, but just how much is unclear!!!

Oh how an inch of rain would help!!!

Market gardeners were over, are ripping up 15000 strawberries, dugout empty, lake to low to pump from, ducks unlimited in the way anyway!!!

It can always be worse I guess!!

Saw the orange blossom midge at 11:00am on the crop of wheat I was rogueing!!!

[wedino]

Tom, I see some very good wheat crops & some poor wheat in our area. A lot of guys skimped on nitrogen & it sure shows. Same goes for barley. Hail & excess rain has taken its toll also. Stories of summerfallow fields being destroyed from heavy rain - all topsoil erroded off hill tops & sloughs filled with top soil - rocks sitting 4" to 6" above ground level on pedestals of clay. This is the first year in 4 that I didn't spray for midge. Could see them, but numbers not high enough to spray out. When midge was bad here the fronts of spray planes were orange with them, even found them stuck on front of my pickup truck. Fusarium is the big worry now, a few guys(very few) spraying folicur. Canola only average, hot weather caused it to shut down flowering early. Also lots of uneven gerination in canola. Some spraying for diamond back moth.

[charliep]

Tom4cwb

Wheat is frustrating for everyone. The answer lies on the demand side - no china as in the case of soybeans and one of the slowest starts ever to the 2001/02 export program in the US. Wheat export business occurs everyday but it is not the kind that catches headlines.

I am a wheat optimist - not a bull. Having said that, I observe the Alberta feed barley market where a month a go users would not pay $125/t ($2.75/bu)for new crop but now they are scrambling to pay $145/t ($3.15/bu). Market emotions/the willingness of buyers to seek forward converage in a rising market will have a major impact on price direction over the next year.