Is the price of wheat Really going up???

[boarderbloke]

Then it Really has a long way to go!!!

[URL="http://futures.tradingcharts.com/chart/MW/W?anticache=1435650049"]MGE Wheat Weekly[/URL]

[URL="http://futures.tradingcharts.com/chart/MW/M?anticache=1435650051"]MGE Wheat Monthly[/URL]

[URL="http://futures.tradingcharts.com/chart/KE/W?anticache=1435650309"]KCBT Wheat Weekly[/URL]

[URL="http://futures.tradingcharts.com/chart/KE/M?anticache=1435650480"]KCBT Wheat Monthly[/URL]

From looking at these charts, we've got a long way to go to get back to respectable prices. The little rally that's happening is just a few pennies in the bushel basket. What makes this even worse is that we as farmers, lost all the foreign exchange to boot, making these charts appear even more favorable than they really were over the last two years.

[errolanderson]

boarder . . . personally believe cash wheat prices have gone from a bear market to a neutral stance. In other words, bottom is in on the cash market.

Grain export margins are going to get pinched through the next crop year as the domestic wheat market competition is heating up.

[boarderbloke]

errol, would you know roughly what portion of total wheat production HRW, SRW, HRS, is exported vs. used domestically, whether milled or fed?

[errolanderson]

boarder . . . good question.

Charlie do you know?

[charliep]

You asked Errol but I can provide in the general sense. Specific classes takes more time.

Wheat excluding durum - About 70 % is exported. 10 % is used domestically for flour milling. Remainder is feed, seed and ethanol.

Durum is 90 % export, 5 % domestic milling and 5 % feed/seed.

SWS and HRW are mostly domestic for ethanol and feeding. More potential in specific export markets but competitive/lots of market develoment to do. Also improvements in varieties.

[boarderbloke]

So would the "wheat group as a whole" be 50% export, 50% domestic? Roughly speaking.

[charliep]

I will put domestic market in volume terms versus percent. I think domestic needs will get met first with exports a residual. Only wheat ex durum - exports are king for durum.

Domestic milling - 2.5 MMT.
Seed - 800,000 tonnes.
Industrial (ethanol) - 900,000 tonnes.
Feed - 4 MMT with a comment variable depending on quality/overall feed situation/international wheat prices.

[charliep]

If you include durum, the proportion moves to 72 % export/28 % domestic.

Crop quality will have a major influence on price. The system has moved to trying to sell generic product - i.e. blended - so it can move large volumes. Last year that meant large volumes of mediocre crop. This year (realizing that I am talking about a crop that won't be harvested for 2 plus months) we have opportunity for better quality. Grain companies will be in a better situation to target higher quality specification markets.

[Oliver88]

Chicago is a significant premium over KC?