Market Watcher Brady Sidwell Says Wheat Prices Could Top Current Highs if More Foreign Crops FailWed, 08 Aug 2018 12:25:12 CDT
Chairman of the US Commodity Futures Trading Commission Chris Giancarlo, travelled this week across Oklahoma to visit with ag industry professionals from both the livestock and grain sectors, to learn more about their needs and how the futures markets are used to help them manage risk in their business. One of those grain commodity professionals was Brady Sidwell, who among many things, does a lot of commodity trading and works with producers to create futures strategies that best position them in the marketplace. He talked about the recent turnaround in the wheat markets with Radio Oklahoma Ag Network Farm Director Ron Hays, during the Chairman’s visit. You can listen to their complete conversation by clicking or tapping the LISTEN BAR below at the bottom of the page.
According to Sidwell, having a reasonable command and understanding of the futures market or working with someone that does, is very important these days given the volatility currently. He believes that point is clearly evident in the recent movement observed in the wheat markets just over the past month or so.
“Since the middle of July, we’re up over a dollar in the wheat market,” he said. “And, this is at a time when a lot of people thought this market wasn’t going to get moving - now here we are over $6.30 where we’re going to be closing here on July ’19 wheat.”
So, what has caused this unprecedented market reversal? Sidwell attributes some of it to the unpredictable trade tactics taken by the Trump Administration but mostly he says it is due to the weather.
“It’s a weather market at the moment. French and German crops have been lower and they keep adjusting lower. There’s also some concern about dryness in Russia impacting their winter wheat,” he said, mentioning also some negative speculation on both Canada’s and Australia’s crops. “So, the global scene is getting a little bit tighter even though we’ve had big stock levels and coming off a smaller harvest.
“All those things are just creating kind of a perfect storm and the wheat market is reacting.”
Whether or not the market has reached its high remains to be known, though Sidwell remarked things are looking “pretty toppy.” However, he says if the USDA reports even tighter stocks than what is expected in the next WASDE report, we could potentially see the wheat market test new highs.
“Bottom line, Russia and Canada have been dry, but if they really do get dry as they keep harvesting and find these yields are definitely worse than what they thought - and then down in Australia as well - we could definitely break out of this.”
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