Wheat might get a delayed Christmas present if prices shape up well, while soybeans are facing too many unknowns to get comfortable, experts tell the U.S. Farm Report Market Roundtable.
"I think wheat is a little bit too cheap and will probably bounce back again," says Mike Florez, Florez Trading. "The only rally we’ve had is a 22-cent rally, and so if we get another 22-cent rally, it takes us up to about $6.22/$6.23, in that area. I would expect that to occur relatively soon. But it’s the dog of the group right now."
There’s also a bit of a silver lining to the wheat carryout picture.
"Among the three major crops, wheat’s the only one that the USDA is actually projecting our carryout to shrink in ’13-’14," notes Joe Vaclavik, Standard Grain. "So we’re not looking at anything phenomenal here in terms of wheat carryout. It’s really kind of a run-of-the-mill type number, but I don’t see it as being extremely bearish to a point that we’ve got to take wheat down to the same price as corn or within a dollar of corn."
Add short-term soybean prices to the conversation and that optimism changes to uncertainty.
"Short-term, I think it’s the biggest wild card out there because we’re still not 100% confident in the South American situation," Vaclavik explains. "A lot of it is going to hinge on that. We’ve got projections for record crops now, but it’s not in the bin, it hasn’t been harvested. The other big projection and the other big assumption now is that we’re going to have this bigger acreage in the U.S. next year. We’re talking anywhere from 5 (million) or 6 million more acres of beans, and that’s based on price versus corn … . I kind of think we’re going to stay in a choppy market for a little bit."
Florez notes: "Our algorithms are short the market right now, but those tend to be three-week trades that maybe go down 50 cents from a high, something along those lines. … Going forward, though, there are so many unknowns that everybody’s basically got all of these grains priced in, where we’re going to have record production from South America, from this spring what we do in the U.S. How do you know that? So much of the negative has already been priced into the market."
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