Thanks much, Mike!
This has actually been a CONTRA seasonal move lower by wheat the past 2+ months!
In tandem with plunging C and S prices during that same time frame as they developed into record supply crops and helped pull wheat down.
Most recent 20 year seasonals:
https://planetarytrader.substack.com/p/wheat-seasonality
Previous seasonals prior to 2007.
https://www.seasonalcharts.com/future_farmprodukte_wheat.html
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During the planting months, spring for corn and soybeans and fall for winter wheat, the source of grain that is available for sale or purchase by end users is from the crops that were harvested during the previous harvest season—the old crop.
On the other hand, during the harvest months, typically July for winter wheat and November and December for corn and soybeans, the newly harvested crop comes to market and supply is higher—hence, the new crop.
Each grain commodity has one new crop futures delivery month and all others are old crop months.
When a new crop is harvested, there is once again a higher level of supply. This is why many of the grain markets tend to reflect their lowest seasonal prices during the new crop trading month.
Wheat markets have a tendency to decline between spring and the July harvest, then begin to rise from these harvest lows into fall and winter.
Wheat, even more than soybeans and corn(that have 2 main suppliers-The US and South America) is grown in many other countries with both Winter wheat AND Spring Wheat.
Winter Wheat is harvested at the end of Spring each year. The Spring Wheat harvest is just over halfway and this years Spring Wheat crop featured robust yields, though the market has know this all Summer.
Crop progress
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USDA August 12, 2024
7 responses |
Started by metmike - Aug. 12, 2024, 1:41 p.m.
https://www.marketforum.com/forum/topic/106589/
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I have a great POTENTIAL wheat trade for you, identified WELL BEFORE it happens, when there is an opportunity for people here to make money instead of finding out 2 months AFTER the entry point.
See the evaluation next:
The Winter Wheat crop planting season is coming up. Starting from around mid September to as late as early November.
Waiting until after that doesn't give the wheat plants enough time before the cold hits to EMERGE and establish deep enough roots to survive the Winter well after going dormant.
The tillering of the wheat plants which defines the wheat stands, ideally should reach the Fekes 2.0 stage in the Fall BEFORE going dormant to maximize survival over the Winter months.
WHEAT GROWTH STAGES
https://stepupsoy.osu.edu/wheat-production/wheat-growth-stages-and-associated-management
The number of leaves present on the first shoot (main stem) can be designated with a decimal. For example, 1.3 is a single shoot with three leaves unfolded. The most significant event in achieving high yields is stand establishment, i.e, the number of plants or tillers per square foot. Late-planted wheat has less time to tiller and should be planted at a higher seeding rate to compensate for fewer tillers.
A tiller is a shoot that originates at the coleoptilar node. Tillers share the same root mass with the main stem (Figure 1). During tillering, the major management consideration is whether stands are adequate to achieve yield goals. Management inputs will not compensate for skimpy or erratic stands caused by insects, seedling diseases, poor seed quality, herbicide injury, etc. A producer may want to apply 20 to 30 pounds per acre starter N to promote tillering, especially if planting without tillage. Excess N applied at this time leads to a lush, vegetative growth which makes the crop more susceptible to winterkill and foliar fungal diseases. Adequate phosphorus (P) and soil pH above 6.0 are needed for good root and tiller development.
Winter wheat can continue to tiller for several weeks. Depending upon the planting date and weather conditions, tillering can either be interrupted by or completed prior to the onset of winter dormancy. Most of the tillers that contribute to grain yield are completed during this stage.
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Armed with this knowledge BEFORE the crop is planted the next 2+ months, gives us the ability to predict how weather will likely impact the planting season,
Spring is usually our wettest season, so excessive rains/cold in the Spring can often impact corn and soybean planting.
Fall is our DRIEST season and this is usually the risk for planting the HRW crop(in the Plains) and SRW crop(Midwest/South).
There needs to be enough moisture in the soil to germinate the newly planted wheat seeds.
Even if you plant in timely fashion, bone dry soils can result in uneven germination and lack of development.
Bone dry soils in Winter also INCREASE Winter Kill because the cold WILL penetrate deeper and do more damage to plants, especially if they were not well established in the Fall, when there is no snow cover insulating the ground below it.
The potential trade setting up features the flash drought/drought in a large area of the SRW and HRW belt right now, ahead of the Winter Wheat planting season.
Keep in mind that the planting has not even started yet...........which also means the market has not even started trading this yet........which is why its the type of trade that you can actually make money on by seeing it BEFORE it happens.
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The current soil moisture maps identify some problem areas for the Winter wheat crops from dryness.
Again, keep in mind that we have almost 2 months for some nice rains to enter the picture and recharge soil moisture enough to turn the weather from bullish to bearish.
The market is NOT concerned right now, knowing this.
If it continues to stay dry, its not whether the market will react bullishly or not but WHEN WILL IT DO THAT and how strong the upside will be.
I would contend that this already started early last week, see price charts on the next page.
I can't always predict the day to day movements .......but have crystal clearly identified the set up here and we always give you the updated weather forecasts.
This is exactly the type of trade that tjc loves the most. Picking tops and bottoms.......which this is basically trying to do with wheat.
Soilmoisture anomaly:
These maps sometimes take a day to catch up to incorporate the latest data(the bottom map is only updated once a week).
https://www.cpc.ncep.noaa.gov/products/Soilmst_Monitoring/US/Soilmst/Soilmst.shtml#
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Updated daily below:
https://mrcc.purdue.edu/cliwatch/watch.htm#curMonths
DROUGHT MONITOR
https://droughtmonitor.unl.edu/
August 27, 2024: Drought returning in the ECB
https://www.marketforum.com/forum/topic/83844/#83852
Extended weather.
https://www.cpc.ncep.noaa.gov/products/predictions/610day/ | ||||||||
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Compare that to the areas that grow Winter Wheat. HRW in the Plains, SRW east of that.
https://www.nass.usda.gov/Charts_and_Maps/Crops_County/ww-pr.php
Sure looks like we put in a significant low, last Tuesday, August 27th in the 495 area. This is the front month, September. The contract with the most volume, December is trading around 15c higher.
https://tradingeconomics.com/commodity/wheat
1. 50 years
2. 5 years
3. 1 year-There's that spike low, reversal higher last week
4. 1 month
5. 1 week-We've already bounced almost 40c from that significant low. This is your downside risk right now. The best, lower risk entry point was the day after the reversal up. However, note the spike lower, retest of $5 on the Thursday morning open. The funds sold hard on the open, below the previous days low/resistance and hit alot of stops, testing $5.........then immediately reversed back up with a sharply higher close. So Thursday was the day that most strongly confirmed that the lows are LIKELY in for wheat. Keep in mind that a huge widespread rain could change the weather's impact BUT NOT THE NEXT FEW DAYS!
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Also, on Mikes wheat chart above, we should note the DIVERGENCE in wheat indicators at the bottom with the price above, especially the MACD that has been increasing, despite wheat prices continuing to DECREASE until last week's reversal up.
The RSI shows a double bottom with the late June, harvest low.
Total rains the next 2 weeks from the last 12z GEFS.
7 Day Total precipitation below:
http://www.wpc.ncep.noaa.govcdx /qpf/p168i.gif?1530796126
https://www.tradingster.com/cot/legacy-futures/001602
%20-%20Tradingster.png)
metmike: Big specs have been covering their net short this year but are still net short by around -33,000 contracts.
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This is the HRW data:
https://www.tradingster.com/cot/legacy-futures/001612
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Unlike corn, they control a higher % of the open interest, mainly because C has a much higher open interest from commercials.
%20-%20Tradingster.png)
Same report for corn and beans:
https://www.tradingster.com/cot/legacy-futures/002602
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https://www.tradingster.com/cot/legacy-futures/002602
%20-%20Tradingster.png)
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We've been pointing out the bullishness of the soybean market set up the past week,especially with the very dry ending shaving off a couple of bushels from the national yield:
Beans
48 responses |
Started by baker - Aug. 8, 2024, 7:36 p.m.
As we pointed out yesterday, the weather has turned BULLISH for wheat ……..along with comprehensive details on wheat trading dynamics that drive the market and price changes BEFORE IT HAPPENED and wheat is +13c today.
Weather remains BULLISH for wheat for the previous reasoning.
same with beans that are +24c at the moment and also have bullish weather.
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This is another bullish weather item that the wheat market has been trading:
#Argentina is facing more weather woes as dryness and winter frosts have plagued the #wheat crop. Rain could be coming within a few days, but the amounts may not be sufficient.
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https://ipad.fas.usda.gov/countrysummary/Default.aspx?id=AR&crop=Wheat
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https://www.cpc.ncep.noaa.gov/products/Precip_Monitoring/Figures/global/n.90day.figb.gif
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2 week rains from the last 12z GEFS. Not much for wheat country in Argentina!
December wheat finished +15c, near the highs, here on Tuesday September 3, 2024.
Less than half of #France's #wheat crop meets the typical protein levels used by key importers and only 1/4 meets average test weight levels (usually 3/4 of the crop meets this standard). France's harvest will be the smallest since the 1980s after excessive rains this season.
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@kannbwx
Aug 28
North Africa is a major destination for French wheat, but China has also been a consistent customer in the last couple years, especially earlier this year: (chart from LSEG Eikon)
