Why Demand for U.S. Wheat Looks Promising

October 21, 2013 10:00 AM
Why Demand for U.S. Wheat Looks Promising

Wheat is leading corn and soybeans in the crop commodities market. The question is: Why?

"In the old days, they always said a good bull market starts with wheat – wheat or oats, with beans," Sue Martin, Ag and Investments Services Inc., tells the U.S. Farm Report Market Roundtable. "The wheat market has a lot of fundamental basis underneath it. It has a good story that’s building. World stocks are very tight. Demand for wheat in the globe is about as aggressive as the production is around the world."

That is creating a positive situation for U.S. wheat producers as prices rise. Factoring in other wheat-producing nations also adds context, says Jim Bower, Bower Trading.

"The global situation looks a little different than what it did right at the harvest of our wheat crop," Bower says. "What’s happened here is, they were counting on Argentina to supply a good portion of Brazil’s usage. What happened (is that Argentina’s) weather situation took at least 30% to 40% of their potential right off the top due to just tremendously dry conditions, drought. Then they had some terrible storms move through."

Brazil and Australia are also facing challenges, meaning that China will likely turn to the U.S. for more wheat should the global crop situation worsen.

"It’s very international, it’s very broad in scope for demand base," Bower says.

Click the play button below to watch Part 1 of the U.S. Farm Report Market Roundtable:

Click the play button below to watch Part 2 of the U.S. Farm Report Market Roundtable:

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