Market Analysis: Wheat Price Dependent On Demand
As the demand goes, so goes the wheat price. This is the normal condition for the wheat market during this time of the year when winter wheat is in dormancy in the Northern Hemisphere. This year is no exception.
The reason for the break in the wheat price since December 1, 2012 was a lack of wheat sales out of the United States. Wheat exporting countries, namely, those in the Black Sea Region sold more wheat than the market anticipated. These “extra bushels” of wheat dropped the wheat price over a dollar.
Looking forward, the United States should become the source for future wheat business. Our price of soft red winter wheat is the best in the world. In fact, this soft red winter wheat will work into feed rations. This is in specific areas around the world in place of corn. In addition, those countries needing high protein wheat see a value in our hard red winter wheat. The combination is a bullish feature for the wheat but traders needs to see export wheat business to improve before they become aggressive buyers.
The question remains; do wheat importing countries need wheat? Have these countries secured enough bushels to “get them by” until the new crop arrives? One thinks of the extremes to answer these questions but the answers are likely in the middle.
This week’s export sales report listed 648,000 metric tons. This was above the range of estimates. Japan and Nigeria topped the list of 21 buyers. China was on the list for a small amount of old crop and 55,000 metric tons of 2013/14 wheat. This solid number and China on the list provided the reason for Friday’s gain in the value of wheat.
Leffler Commodities, LLC
2901 Lakeshore Drive
Augusta, KS 67010
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