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Honored Advisor

Weat June 16...............

Stack enough 100 degree days on top of one another and you get ................. wheat harvest.

 

Last saturday one combine running near Amarillo Texas.  Yesterday...Thursday the 15th Multiple Combines running in sw ks... with dry tests and protein testers on call.

 

Not sure I have ever seen "protein" be such an issue...   

 

Early results are showing dryland at 20 bu per acre and irrigated at 40-55.....    Both 25 bushel below average....  that is just the acres left to harvest.....   proteins from 11.6 to 13.6 ..... a little higher than expected and close to normal for the area.

Test weight low on dry land at 57-58  and irrigated is at 62...

 

We are not in the bad mosaic infestation area but some damage in these yields.  Some 10 bushel yields in mosaic fields.

There are better fields to come..... but not many.

 

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Futures reflecting what we see in the scramble to find some protein...   We can get another 30 cents out of our 2016 wheat so I suggest we set a sell at 4.95 today and see where it goes..... might be a little too agressive but another 30 cents on our 10k remainder is not a bad thing.

 

Cash ....... we are shopping bids on wheat protein and cash sale from the bins fob. on a 50 cent basis improvement....

Locally we are at -85 July kc wheat........ getting interest at -30...... 

If we can get a near 0 basis bid we will move it fob picked up next 60 days and renown on the board (depending on how weak or strong the harvest turns out.) 

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6 Replies
Veteran Advisor

Re: Weat June 16...............

SW just wished I had my act together as well as you.
Protein should be BIG. I'm using my phone and if
At. Home I could post kc terminal protein
Bid. From what you quoted, that would be $1 to almost $1.75 premium.

As the song goes "I'm going Kansas City". But don't think there is an elevator at 12th & vine.

Might give Russel a call, about 250 miles closer.
They have a gluten plant and pay up for protein
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Honored Advisor

Re: Weat June 16...............

it is extraordinary... cheapo

 

We normally get a bonus for 14 and over.   Well our elevators get a bonus for 14 and over...   Most producers only see it in improved basis...  which by the way went up 20 cents this morning.  Local elevators are now -60 basis.

 

but offering 30 cents over 12 is pretty rare.  and often a mirage.

 

our wheat is poor this year ..... 20 bu average will probably cover it....

 

But if soil type and stress build protein ........... From Baker to  Adams Oklahoma.  The area around regularly cranks out 16-17 proteins...  It is our farms proud southern end and an interesting part of the world ..... we have a few fields there so we try to use our bins for a little bonus..... occasionally it works....

 

In the back of my mind I am thinking..........."who owns that ground pile of wheat from 2016 I live close to?"

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Veteran Advisor

Re: Weat June 16...............

Sw. Our local elevators went from -.95 to -.85. Still $.25 off your local basis. I'm trying to figure that one out. Which direction do your area elevators ship wheat?
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Honored Advisor

Re: Weat June 16...............

It has changed.  We used to go east to wichita or kc......

But we always got a freight bonus for delivering it across the line to oklahoma.

 

Now it is south and southwest.....   The terminal unit train loader east of Hooker, Oklahoma meant more of our grain went to the west coast as well as the gulf.

 

This time there is a committment to ship wheat out of the Texas panhandle at harvest time( I am assuming for export).  A company from Amarillo is in the area bidding for wheat.  The acres down there are just not what they normally are and they need bushels.

Another company out of KC is bidding hard for new crop protein.... anything over 11%   ------- 30 cents bonus for anything over 12%....  

Yet the old crop pile still sits in Liberal and Perryton.  I wish someone would explain that one to me..... I know it was cheap wheat, but why sit on it this long...??

 

clayton we are nearly out of the 2016 corn and I am so glad we got rid of it without much discount...... The quality was poor...

And so was the wheat in 2016.  poor test weights and protein.

 

Anyway the coop should do all right with the wheat they get.

 

 

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Veteran Advisor

Re: Weat June 16...............

I just looked at our local coop website a bit ago. See they narrowed basis another $.20. Now -$.65. Cash price $4.09. How much more upside will there be?
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Honored Advisor

Re: Weat June 16...............

Clayton,

 

I got out of the repurchased ten loads of 2016 wheat at $4.95 on the overnights.  So no wheat hedged or owned on paper and if we are up from here 2016 marketing may be over.  At $5 , Sept kc wheat is at its strongest resistance point looking at the 6 months chart.  It has been here three times now and approached it two other times without much life above it.  

If it goes back down to the $4.60 range Ill consider buying it back again depending on the news driving it and considering the difficulty it has had going below $4.50.  

If we keep going up from here 2016 marketing for me is probably over.

2017 wheat is being harvested now and coming into the bins and being sorted by relative protein.  We are looking to establish a buyer and a relatively good basis contract on our ability to deliver a volume of protein in at least a portion of the crop.  If we can do that we will look to sell this rally within the next 60 days when we should know it this is just another trading range or a supply short market with all new prices beyond the $5.50 level.  That will take more good news than we have now. 

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If we slump back into a trading range that touches on the cost of production or below(with basis included) then I will look to buy back a portion of the crop in that level...... $4.50-4.60......and buy it out there a few months so I have several months to let the market work.  I always want to buy or sell on paper relative to value... buy a cheap product or sell a high value product(like when the feedlots are buying hand to mouth rather than 90 days out.  With that thought in mind in the last couple of years I have not been able to buy back because we were in a long down cycle looking for a trading range.  I think trading ranges happen when commodities are either undervalued or overvalued....... overstocked or in short supply...

Cattle are pretty strong and if meat exports keep expanding.  I just don't see wheat for grain building huge stocks with usda caring very little for surplus inventory(a $2.89 loan rate).  Wheat is still the winter/spring grower for lots of cattle.  World wheat grain stocks don't mean much in reality because the inventory is not worth being that mobile.  supply and demand are local issues.  And acres are down for a couple of years if not more ......locally.

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How much upside.........................maybe a years worth.......but I am expecting a post harvest hangover for a buyback chance, before we realize we didn't raise much wheat and are still out of protein wheat.  The market will have to buy back acres and cattle prices are going to pay pretty good for the gain.   I saw a lot of circles taken for silage this year either as wheat or triticale.  More dairies? Shorter water?  or wheat price and basis?   I think it will take the $6 range and a small basis to expand a supply that has been going down a long time...

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