JPMorgan - wheat may be as short as '07-'08

[Palouser]

The actual global production of wheat has fallen historically short from assumptions this year. Something like 40 million tons. I've noticed that reports out of Saskatchewan on the grain harvest is turning out to be disappointing. Counter to recent predictions.

Wheat carried '07-'08. But, we are now short corn AND soybeans, unlike in '07-'08.

My assumptions have been that wheat would be OK this year even if not abundant. But, area after area has been hammered. Luckily China had a good crop. So did India. But China's inventory (strategic reserves) are not going on to the market, ever.

This may be a very chaotic year. Why hasn't the market reacted? Because, it never does. It's a lagging indicator. Get used to it. Maybe it will by December or January. This is a similar pattern as '07-'08 and the Russian drought.

Stay clear of the fan.

[ag-?]

I am wondering what will alert this market to very tight wheatstocks? Ibecause longer it takes tighter will be wheat stocks.  The usage of wheat for feed I thinkis going to be significant with tight corn crop and US and Canada wheat growing region are dry and  are continuing to get dryer. This could be a very interesting coming year corn, soybeans,and what could all be very short and will be competing for acres.  This drought  seems like its expanding  and last year pattern of very dry  fall is continuing.  Also what is upside potential for wheat are we going to break 2008 peak prices we saw in spring wheat that year.

[Palouser]

I'm thinking more 'next year'. But, it may not be. Time will tell. We can't afford a sub par global crop - or a koockout blow to a major exporter tyhis next year.

I will tell you this! If it's not the big one - it's what the setup for the big one would look like!

An opportunistic marketer like myself now pays every attention to the trends. Including the small ones if it's weather. Important trends are small ones that continue and become more intense.

Here's what I'm watching. 1) Canadian yields that some expect to be good and others have questioned - and yields coming in are favoring the latter at the moment. 2) Black Sea percip trend for planting, Aussie percip trends coming up and S American percip trends, in that order.

I am leaning toward the expectation that this could be a wild year for marketing. It will be competition, even though I expect enough to go around. 

[wt510151]

Last year 75 percent of the High Plains didn't have drought, now 25 percent are in exceptional drought. A lot can change in a year. Corn is being harvested before beans here. Wouldn't be hard to plant wheat in corn stubble if there is profit avaiable. Who knows what the weather will hold for us if we start planting this fall. Could be a dry winter.

[Whitesand_Farms]

 I farm in NE Sask and the yields are sickening. There was 50+ bu straw and im lucky if to break 30. I finished up 700 acres and averaged 28 bu/acre across the board, I combined 600 acres of canola and won't avg. 20bu/acre on it. I have some later crops that might come in maybe 5bu/acre more but that wont even pay my fert bill. I have talked to friends across western Canada and its the same all over maybe a couple pockets that crops are yielding better but theres going to be a big shake down when statscan puts out there next numbers.