Repeating, wheat is grown so diverse geographically, risks of mass shortfall are vastly reduced. The “perfect storm” can happen, but very low odds. Analysts covering wheat look at the composite crop and scale the data. Sometime back someone thought a freeze in Brazil during their winter harmed win. Wheat, not, plus the # suggested was a fraction of a % relative to the world crop. Annually several growing regions have less than ideal conditions and annually several have great conditions. Thus if you review world wheat output over 20, 40, 80 years, largely we grow nice wheat crops with some variation.
The media has to say something and day in out we can read some component positive or negative, but much is vibrations, useless.
The “fundamental trend”, the market’s purpose, its mission, is the key if there is any key, economic based with mother nature overriding.
IE corn, back to back poor years in the largest growing region, NA, with less elastic demand vs. 10 or even 5 yrs back, brought 7-8$ corn. Now the mission is respond to price, plant more, and more grows as long as ‘mo nature cooperates. This year she has, though we are under trend. Btw imagine if we were at trend.
For wheat, that mission started 2-3 yrs back. We had a perfect storm with a few important growing regions having poor yields side by side. But a commodity is just a commodity. Look up the definition. Ag Econ 001, commodities trend towards their cost of production.
“Floor traders and specs are certainly not a part of it except for brief periods of hours or days”
The floor died a decade ago. We trade electronically.
The speculator palsy a very important role. See Samuelson, the econ text we were supposed to read in college.
He/she take on risk others can’t or won’t and if he /she performs economically useful functions - on average – they get paid. IE say next yr we grow 14.5 B corn, and ES is 3 B. At the worst time in harvest – outta storage, corn on the ground, oh my – a good spec will take on supply, he is demanding supply when the market and producers vcan’t handle it. Odds are, those very low prices incite a higher than expected use yr and those low prices discouraged bankers and producers whom start to lower planting oplans. And on average, (note, no sure thing yr in yr out) he will be paid. Selling in March and 50% in late June.
Mere buying or selling by a exporter or importer or a spec or anyone is meaningless. Zip.zip. In every crop year, through time, the market, with economics driving, discovers the unfolding truths .
Is what it is.
Re exports delays. Of course those facctors are bearish . Crops are grown to be marketed and consumed.
Argentina recheck your data, Q2 GDP was up 8.3%, growing facter tthan China. Making stuff up to make a case is
kinda self del ______. Nothing prsonal.
