Published on: 11:36AM Aug 26, 2011
According to the USDA’s 31-year historical data, current harvest progress and the combined good to excellent conditions of hard red spring wheat (HRSW), only 2004 closely matches this harvest year’s results.
Data shows this year’s current weekly harvest progress, or Week 33, is 29%. Further, the combined good-to-excellent conditions of HRSW total 62%. In 2004, Week 33 had HRSW harvest progress of 21% and combined good-to-excellent conditions of 66%.
The average increase in harvest from Week 33 to 34 is 16.6% over the past 31 years, In 2004 that number was 19%, with combined good-to-excellent conditions decreasing 2%.
In August 2004, HRSW futures peaked in the middle of September and then dropped 15% by the end of November, despite a delayed harvest in Week 33. By early December, the HRSW futures experienced 50% retracement from the September high to the November low. By Feb. 22, 2005, futures prices saw chart-based resistance. According to the USDA, the season average farm price performs at its peak in early February.
As a side note, the ending stocks to use for HRSW were 30% for 2004, versus a previous five-year average of 37% and previous year of 32%. This history shows that as the ending stocks to use percentage decreases, prices increase.
Ask yourself these questions: Are you profitable at present prices? Is the futures or cash price paying you to store the crop? Can you predict prices?
MGEX welcomes your questions.........Joe Victor
Information used to compile this update is from publicly available sources. Nothing contained herein should be construed as a trading recommendation of MGEX, its employees or its members. For informational purposes only.