Supply Outlook Counters US Weather; Wheat Futures

Wheat futures continue to extend their gains on the outlook of improved growing conditions from Europe to Australia won’t be enough to compensate for deteriorating crops in the US. The United States continues to be the world’s biggest exporter of wheat.

Wheat futures have gained 18% this year despite the USDA’s estimate for the Northern Hemisphere harvest to rise by 5.7% this year – the first increase in four years. Other analysts feel rising supplies in most wheat exporting nations, and reduced shipping delays in Canada after their bumper crop, may be enough to cap the current rally.

Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, had this to say regarding the current wheat futures situation,Although wheat (futures) have been strong last few months we might see a break lower if the weather didn’t damage the crop as much as we feared. We might see a break soon in the wheat (futures) because we might be overdone to the upside.”

The trend for wheat futures has technically rolled into an up-trend with today’s action. I am leery of being long wheat futures this time of year, and may consider trading both sides of this market.

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