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It looks like we are going to have a large early harvest. The transition to new crop will start in the next two weeks. Early reports from north central Texas have good test weight and good yields nothing on protein yet. The market seems to want to wait on the USDA report later this week. It looks like we will see the 1st HRW estimate very close to 1billion bushels. This is 220 million larger than last year. A huge percentage of this increase perhaps all of it looks to be south of I-70. On one hand there is a huge amount of vacant elevator space in this area to hold the crop. The large spread July/Dec will encourage the trade to carry this wheat. On the other hand this area is very short feed grains the increased use of DDGs allows the cattle feeder to feed more wheat in his ration. The wide wheat/corn spreads will get wider. The feeder will bid up the wheat basis to buy wheat away from the carry. This will go on until the advantage to feed wheat goes away. This should support basis levels into late summer. It will probably make all proteins worth the same from ords up to about 11.5 until corn harvest starts. At that point in time basis levels could crash and burn. This break could be severe enough to eat up the carry and then some. So be careful bidding up new crop basis to carry. Total US wheat production could excide 2.15 billion bushels. With high domestic corn prices supporting wheat prices exports could be lackluster in the 1st quarter. Futures could continue to struggle, perhaps a test of $5.75 in KWN. Futures usually have a hard time responding to feed demand during harvest. The basis will do the work early on. Chicago remains strong against KC, perhaps a 10 cent premium basis the July. Corn will remain strong against wheat unless wheat demand becomes strong enough that it needs to buy wheat away from feed. It looks like we want to continue chopping sideways to lower. Selling 10 to 15 rallies with stop protection remains the way to trade.
Regards Joe Christopher
This publication is strictly the opinion of its writer and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
Futures and options trading involve risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. In no event should the content of this market letter be construed as an express or an implied promise, guarantee or implication by or from Crossroads Commodities that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance.”

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