Wheat had been the dog recently, but it woke up and drove the bulls this week, rising 47¢ in the nearby contract for the week on evidence that some wheat is in trouble, notes Jerry Gulke of the Gulke Group. "Not only has some not germinated, but some clients in the deep South tell us they didn’t plant wheat after all because prices of other crops improved. There could be just 2 to 2.5 million more acres harvested in 2011 instead of the 3 to 5 million some expected earlier.
"The weekly and monthly price charts are pretty exciting. If prices break out of a pennant formation we’re watching, it could mean another $1.50 upside move," he adds. (Use the link at right to request Gulke's updated chart.) "World food and feed needs have markets on edge—it’s totally different from two years ago when it was fuel that drove prices. As I said in the November issue of Top Producer, we can and did stop driving when gasoline hit $4; we are much less likely to stop eating."
Corn rose 24¢. "We’ve still got to curb demand somehow and there’s no sign that has happened yet," says Gulke. "This is leading to an inverted market with nearby prices higher than further out months. Meanwhile, all this week China was selling put options, which would allow them to own corn at a lower price—at the same time turning down a shipment of U.S. corn and causing a short-term negative in the market."
Soybeans were pretty calm he says?up 20¢ for both the current and 2011 crops.
Next week, watch private analysts’ estimates ahead of the Nov. 9 USDA report for expectations regarding further adjustments to yields.
For More Information
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