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On the First Trading Day of 2020- OSU's Kim Anderson Likes July KC Wheat If It Stays at or Above Five Dollars

Thu, 02 Jan 2020 17:47:32 CST

On the First Trading Day of 2020- OSU's Kim Anderson Likes July KC Wheat If It Stays at or Above Five Dollars On the first trading day of 2020, Oklahoma State University Extension Grain Market Economist Dr Kim Anderson offers his first 2020 analysis of the hard red winter wheat market:

"The reason for the 56 cent wheat price increase may be projected tight wheat stocks in the Black Sea exporting countries (Russia, Ukraine, and Kazakhstan), the lowest projected U.S. hard red winter (HRW) wheat stocks since 2015/16, a potential reduction in harvested wheat acres in 2020/21, and potential wheat production problems in Russia and Ukraine.

"The December WASDE lowered U.S. wheat ending stocks by 40 million bushels (mb); 10 mb each for HRW and hard red spring (HRS) wheat and 20 mb for Durum wheat. Total U. S. wheat ending stocks are projected to be the lowest in five years. World wheat ending stocks were increased 45 mb to a record 10.6 billion bushels. The world’s wheat stocks-to-use ratio is projected to be 38.4 percent, which is the highest since 1968.

"The stocks-to-use ratio is calculated by dividing ending stocks by total wheat use. The projected stocks-to-use ratio is 46 percent for U.S. wheat (down from 53 percent in 2018/19), 55 percent for U.S. HRW wheat (down from 70 percent), 38.4 percent for world wheat (up from 37.7 percent), and 11 percent for Russia and 4 percent for Ukraine. World wheat stocks are projected to be a record, but Black Sea stocks are projected to be very tight.

"KC wheat contract prices broke the long-run down trend that started in mid-August 2018. A short-run up trend has been established. The KC July wheat contract has support at about $5.00 and again at $4.65. If the KC July wheat contract price stays above $5.00, the price target will be about $5.25. The harvest contract basis is in the minus 35 to minus 40 cent range ($5 - $0.40 = $4.60)."



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