Wheat Will Rally, Bear Markets Will End in 2016, Analyst Says

December 15, 2015 12:00 PM
Wheat Will Rally, Bear Markets Will End in 2016, Analyst Says

A rally in wheat prices is coming in the near future, representing the first in a series of events that will end bear markets for commodities in 2016, says Mike Florez, Florez Trading.

“One thing that does interest me is the wheat market,” Florez tells “AgDay” host Clinton Griffiths. “The funds are really short the market big time. Five times in the last four years, they’ve gotten this short. Every time they’ve gotten this short, a rally has ensued. The smallest rally you got was 75 cents, the biggest rally you had was $3.50. I’m going to play this. I haven’t bought anything yet, but I think the smart way to play that is to buy some calls on May wheat. Something that’s 10 or 20 cents out of the money might pay off pretty well.”

The wheat market likely will bottom first, followed by other commodities as the new year continues, he says.

“I do think the bear markets will end in 2016,” Florez says. “I look at time cycles.  Where we bottom now has a direct correlation to where something topped or bottomed in the past. It’s coming due in 2016, probably springtime. We could certainly get lower into then. Typically when markets bottom, they kind of get ugly; they get volatile and the bottom falls out. I don’t know if we’ll be in that situation, but it’s akin to what oil is going through right now.”

In the meantime, producers should sell corn and soybean rallies as they have the opportunity, Florez says. He doesn’t expect any big drops for those markets.

Click the play button below to watch the complete interview with Florez.

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Spell Check

Western, NE
12/16/2015 11:42 AM

  You might see the 75 cent bounce, but I wouldn't hold my breath for the $3.50 bounce. The fundamentals don't support a large rally. The bottom won't be found until there is absolutely no buyers out there. End users I'm sure are sitting on the sidelines waiting for it. Local basis tells me that there is still no demand for the wheat. It's 33 cents wider than it was this time last year! Hope Florez is right, but I fear he's just trying to solicit business.

nisswa, MN
12/16/2015 12:19 PM

  Wheat made contract lows first. I would not be surprised to see a 50 cent drop in corn prices and a 1.00 drop in soybean prices for 2016.Yes and every year there is a weather issue that might provide some temporary bounces. Outside of this common occurrence; look out below.

Lyn Tenopir
Wilber, NE
12/29/2015 06:19 PM

  Do you think corn will rally with all these piles of corn getting soaked with these rains and mild temps. They are starting to pick up the piles but a good 2 foot on top is rotten.


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