Is upside potential in wheat over for now?

Farm and Ranch Report March 14, 2011 In the wake of last week’s USDA supply and demand report several market observers are saying its downside risk more than upside potential that the wheat market now faces. Here is what Jonas Ford of Ceres Hedge told a Minneapolis Grain Exchange teleconference following the USDA report.

Ford: “Seasonally we are starting to price out, especially in the wheat, the likelihood of serious supply constraints is starting to go away. You are starting to see that in the winter wheat futures right now. In Kansas City they are slipping against Minneapolis and Chicago and I think that reflects the earlier harvest. Some of the fear of actually having a shortage is coming out of this market.”

“Upside potential for wheat is largely exhausted” is among some other comments from market analysts around the world.

In the USDA report U.S. wheat ending stocks for the current market year were raised due a reduction in export expectations. And world wheat ending stocks were increased 4.1 million metric tons. That puts the world stocks-to-use ratio at 27.4 percent which an analyst says shows old crop wheat supplies are not short.

Still, analysts caution any bad weather in the northern hemisphere could send wheat prices back up.

I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on Northwest Aginfo Net.

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