Higher US Hard Red Wheat production???
Jun 13, 2013
Wheat traders, myself included, are left somewhat scratching our head as the USDA opts to bump HRW wheat production estimates here in the US higher rather than lower. I wasn't looking for any type of major reduction, but I am having a hard time figuring out just exactly where the big HRW improvements have come from. Sure, some guys down South are seeing better than expected yields, but I am also hearing more and more from producers who are having to "zero" out fields. I guess as wheat has proven time and time again you can never count it down and out until the final bell rings. On the flip side the USDA did raise their wheat export numbers, I am assuming on due to the recent Chinese interest in SRW wheat. Producers who have been apprehensive to make sales may now have very options as the USDA starts to "increase" production here at home (not further decreasing), and the Black Sea region is just days from harvesting a much more plentiful crop when compared to last year. Despite production downgrades by the USDA yesterday, Russia and Ukraine are still expected to export 6-8 million metric tons more than last year. Bottom-line, without a major bullish US production story, the only real "bull-card" left in the deck right now is some type of smoking-gun in China. My worry is that with several bearish cards in the deck (Australian production numbers increasing, Black Sea harvest quickly approaching, US HRW wheat not completive in global marketplace, India back in the exporting game, Canadian export competition increasing, EU production rebounding to some degree, etc..) we are more apt to see these bearish cards being dealt than we are the Chinese situation being revealed. Therefore, I am of the opinion producers should continue to use any type of bullish weather scares or Chinese headlines as an opportunity to reduce more long-term risk. To recieve a 45-day free trial to my daily report CLICK HERE