Market Matters Blog
Katie Micik DTN Markets Editor

Friday 08/30/13

Wheat's Bear Market Is Almost Over: Lower Acres Will Lead to Higher Prices, Eventually
If USDA estimates are correct, 2013-2014 will mark the fourth consecutive year of lower U.S. wheat supplies. With planted acres near their lowest levels in 40 years, the market will soon have to pay up for more wheat production.[Read Full Blog Post]
Posted at 1:56PM CDT 08/30/13 by Todd Hultman | Post a Comment
Comments (2)
One may not have to wait two years to see prices rebound. The September wheat stocks report might provide the needed fundamentals for a higher price yet this year. The USDA's WASDE has corn stocks for the year just ending (2012-13) at 719 million bushels. That is down 270 million bushels from the prior year's (2011-12) ending value of 989 million bushels. The 2011-12 corn marketing year saw an early harvest of the 2012-13 marketing to help the short supplies. That is not happening this year. USDA indicated 53 million more bushels of wheat was used for feed and residual in the 4th quarter of the 2012-13 wheat marketing year when compared to the 2011-12. (June 1st is the start of wheat marketing year.) That would lead one to believe - and maybe wrongly- that the first quarter of the 2013-14 wheat marketing year (wheat harvest this summer) would be larger than last. USDA is showing feed and residual use of wheat being 110 million bushel less this current marketing year than last. (Wheat Feed and Residual numbers are large in the 1st quarter than tend to be small or negative in the following quarters.) This seems surprising with tighter corn stocks, slower corn harvest progress, wheat prices favorable to corn in the June through September time frame and the large 4th quarter wheat consumption. The error in this argument could be in the pace of wheat harvest between the years. The September stocks report and October's WASDE may provide a clearer projection. Freeport, IL
Posted by Freeport IL at 2:40PM CDT 09/04/13
Thanks for the insights Freeport, IL - all good observations. The market has been slow to respond to gradual fundamental improvements so far. It will be interesting to see what might trigger a change from the current bearish slump.
Posted by Todd Hultman at 3:01PM CDT 09/04/13
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