Supply Threats a Gainer for Wheat Futures

There is consensus brewing for global wheat supplies to tighten with dry-weather deteriorating crop conditions herein the US, and Australia, plus planting delays across Europe due to rain.  Wheat futures are up on a second trading day in a row and at a five-week high.

Earlier this week, the USDA reported 39% of our domestic winter-wheat crop was in good or excellent condition.  This is the lowest amount since data has been collected in the mid-’80’s, and compared to France’s 64% of their current “soft-wheat” crop planted (88% this time last year).

The winter wheat crop in the U.S. is experiencing very dry conditions as it heads into dormancy.  However, prices are rising on the world market which in turn makes the US wheat market undervalued,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, regarding the current wheat futures situation.

Wheat futures have been trading absolutely sideways to lower for the past three months.  It is due for a breakout and when it does, it could be a significant run.  Big USDA crop production report in the morning, but am looking for wheat futures to breakout to the long side.

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