According Louise Gartner, writing for, despite the mayhem in the financial markets last week, “wheat managed to keep price action relatively under control. We did see some price choppiness, but at least it wasn't violent price swings like we saw in the equities and financials.” Gartner believes that fundamentals in wheat continue to look increasingly bearish as the harvest draws near in the US southern Plains, and the weather conditions continue to be favorable. The cold weather that moved south last weekend did not get cold enough to damage the crop and it appears frost scares are over for the season.

Hightower reported that Tuesday’s crop production and supply and demand reports from the USDA were perceived overall as bearish. Whilst wheat supply and demand numbers were unchanged for 2009 / 2010, the crop production report for winter wheat showed production around 25 million bushels higher than anticipated. Ending stocks also came in higher than expected, putting them at the highest levels since 1987 / 1988.

Another recent blog entry, Closing Grains Commentary May 11th, explains “Coming into the week, we were hitting two-month highs (5.17 July wheat). On Monday we saw a large correction and July finished 17¾ lower.” We have continued to see a drift downwards since that time. Crop conditions continue to show wheat in good shape. There is a huge carry over in the futures market and a discount in the basis. Further, according to Justin Kelly of EHedger LLC , despite an early rally this morning, a sharp selloff later in the day left the market 1 ¾ lower in the July Chicago contract. “Fundamentally the wheat market is losing export business and still has a surplus of supplies worldwide. This will make the Chicago wheat contract susceptible to an even further break despite the occasional short covering rally.”

It is the opinion of the writer that with harvest just a few weeks away and no production problems on the horizon, we should expect a downward turn in the market. Spring wheat planting have also started well, with good moisture in most places. We continue to have large volumes of old crop in stock; there continues to be plenty of wheat in the US and the World.
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