Market Analysis: Wheat Price Action is More of the Same
The wheat price did it again. On Wednesday, bullish wheat traders drove the price higher in early trading only to give up some of the strong gains by the end of the session. The rest of the week, the wheat price caught spillover pressure from a sharply lower corn and soybean market. By the end of the week the December Kansas City wheat price gained 1 1/4 cents over last week’s close.
For the last 3 1/2 months, the wheat price has stayed in a range as illustrated by the December Kansas City wheat chart. Historical high prices have kept a lid on this market. As the wheat price has reached the top of the price channel, wheat exports vanish. Demand and more so, hope for demand finds willing buyers on breaks. These buyers are both commercials and speculators. This sideways trading pattern will likely continue until the first of the year.
Wheat export demand from the United States should see some improvement after the first of the year. Some major world wheat exporters will run out of wheat or price themselves out of the market. The Ukraine government confirmed this week a ban on wheat exports starting November 15. Commercials in this country have booked 5.44 million metric tons of wheat; their allotment was 5 million metric tons. Some wheat buyers will have to scramble to fill their shortfall. Additional countries in this region have slowed down wheat export by pricing themselves out of the market.
Competition for world wheat business has moved to Europe, Argentina and Australia. Our wheat price is inching closer but freight advantage for the North African Countries keeps France in the market. Wheat exports from the United States should improve in the early part of 2013but wheat inventory is plentiful and many wheat importing countries will have most of their needs met.
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