World Wheat. In the midst of a currency crisis and domestic food inflation, the Russian government has sought ways to limit wheat exports and boost reserves over the last several weeks. An announcement is expected today that, in addition to informal limits imposed by quality controls, the Russian government will institute an export duty (Bloomberg, “Russia Plans Grain-Export Duty to Combat Rising Bread Costs).
In the December World Agricultural Supply and Demand Estimates USDA estimated that Russia would export 22 mmt of wheat in the 2014/2015 marketing year. Deputy Prime Minister Arkady Dvorkovich said Russia had already shipped 21 mmt with the potential to ship 28 mmt. Dvorkovich said exports of 28 mmt would limit domestic supplies.
All this is occurring against the backdrop of a record world wheat crop and increasing world wheat stocks. Estimated days of use on hand at the end of the marketing year increased to a 100 day supply in the December WASDE, up from 95 days last year.
Weather. Much of Kansas and the major wheat producing regions of Colorado, Oklahoma, and Texas continue in some degree of official drought. The precipitation forecast for the next 7 days calls for light amounts over this region. Longer term, consistent with a developing El Nino weather pattern, the forecast is for a wetter and cooler than normal winter.
Commitment of Traders. Managed money positions in the grain markets took on a more bullish tone in positions reported in Friday’s Commitment of Traders report from the CFTC. Net long positions by hedge funds were up 17,373 led by increases in corn and Chicago wheat. The price index was up 3 points with KC wheat up 33 cents on the week, Chicago wheat up 38 cents, and corn up 11; soybeans were down 26 cents.
2015 Wheat Marketing Plan. Wheat prices are up on concern over available export supplies out of Russia, but the Russian government has already allowed virtually all of USDA’s expected level of exports into the market and world wheat stocks are up.
This move in the market is offering another early season pricing opportunity coinciding with my marketing plan. I will use a technical signal like moving averages or the simple breaking of the trend line to add to 2015 sales.