The pandemic has impacted all of our commodity markets. Wheat has seen more price support than most commodities. Now is the time to execute on a marketing plan.
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Currently – Ogallala Aquifer Groundwater Survey, Dr. Mallory Vestal (mvestal@wtamu.edu) & Dr. Bridget Guerrero (bguerrero@wtamu.edu)– Participate here
March 30 – Planting Decision Webinar (Details below), 10 a.m. https://zoom.us/j/441214722
Wheat
It is a rare occasion that the opening price chart at the top of the blog is all green. Normally I would consider all green positive, unfortunately at the moment those supportive closing prices are a function of how low the markets opened this week. That being said, wheat started a real rally last week that has continued through most of the current week.
Figure 1. KC Hard Red Wheat July ’20
Technicals seem to have taken over for now on wheat. Even a bullish export report was not enough to maintain the peak price wheat achieved yesterday, likely because these sales were baked in ahead of today. A large weekly export sales report came through for corn, beans, wheat, and meal. Each commodities weekly volume exceeded the amount needed to reach USDAs annual estimate. The featured buyer; China.
What is driving this spike in price? We are likely seeing a short term speculative response on the sudden influx of customers buying shelf stable products that include wheat. When I’ve braved my local United most of the pasta, frozen foods, and bread are missing. A common theme among those goods is wheat as an ingredient.
On the note of technicals, July ’20 KC Wheat broke through the 100% retracement on Wednesday and broke out of the upper channel. The straight rally ended the trading period lower on Thursday. Additionally, the Relative Strength Index (RSI) indicates overbought conditions, which is another near-term bearish signal. These signals indicate we might’ve reached the near-term peak, as supply and demand fundamentals have not changed in the long term.
Now is the time to execute on your marketing plan. Texas A&M AgriLife Extension District 1 Budgets provide district-wide average break even prices. Irrigated wheat breakevens for total cost are $7.84/bu and $4.44/bu for variable cost. The $4.90 to $5.02/bu range does not necessarily cover total cost, but these prices are some of the most favorable we’ve seen since January. With the current volatility in the market there is no guarantee that this price support will last. In fact, technicals indicate a short-term reversal is in our near future.
If you have more questions or would like a weekly update on wheat pricing and developing a marketing plan, I highly recommend Dr. Mark Welch’s newsletter.
Upcoming Planting Decision Webinar
If you’re curious about the impact of COVID-19 on your wheat marketing plan or summer planting decision join our upcoming zoom panel. Next Monday, March 30 at 10 a.m. Drs. Welch and Robinson will join Pancho Abello and me to discuss adjustments to the new price environment. Dr. Welch is the state grain marketing economist and Dr. Robinson is the state cotton marketing economist. Both are employed at Texas A&M AgriLife Extension in College Station. Pancho Abello is the District 4 Management Economist is Vernon. The webinar is first come first serve so join us right at 10!
To join, simply click the link below at 10 a.m. on March 30.
Join Zoom Meeting
https://zoom.us/j/441214722