Record Supply Should Keep Wheat Futures Dragging

Some in the industry are predicting over a 7% increase in wheat inventory this year, and record output next year as well.  If wheat output goes as planned, the record output numbers are said to have exceeded only twice in history.

Farmers are currently preparing to reap the third biggest wheat harvest on record and as a result, wheat futures are falling for a second year as supplies only add to the global stockpiles.  Current wheat stockpiles are at an all-time high amid record-high food prices.

There is a lot of wheat in the world, and the winter wheat crop in the United States is of to an excellent start.  Fundamentally, these two factors along with modest demand increase expectations will pressure wheat prices going forward,”  stated Kevin Craney, a senior commodities broker for RJO Futures in Chicago, regarding the current wheat futures situation.  Craney added, “Wheat prices will continue to be a function of corn prices, and I think that there is more downside for new crop corn prices as we advance through the spring planting season.”

The trend for wheat futures has been trading sideways since the beginning of the year, and I anticipate a downside breakout soon.  I am specifically looking for lower risk trades to get short this market (and hopefully we have one tomorrow


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