11/13/06 Analyst says keep eye on China

Farm and Ranch November 13, 2006 USDA made no changes in supply and demand balance sheets for U.S. wheat overall or for wheat by class in a report issued late last week. U.S. wheat ending stocks for the current marketing year are still projected at 418 million bushels, the smallest since 1995/96. USDA did narrow its price range a nickel on each end of the range for its average wheat price projection to $4.15 to $4.55 a bushel. On a global basis USDA reduced world wheat ending stocks a half million tons to 118.8 million. That's down 19 percent from last year. USDA's Australian wheat crop estimate was trimmed a half million tons to 10.5 million. Wheat production in Russia, Ukraine and Romania was raised. After digesting the report, Jim Bower of Bower Trading said one thing to keep an eye on is China. Bower: "I think China is really the tipping point here now over the next say two to four weeks. If China can get some solid beneficial rains to help germinate that crop, really get it off to a little better start, because it is off to a poor start. But I think we have to monitor wheat on a daily basis based upon the situation stemming out of China from a wheat focus. And then I think wheat will follow corn to some degree." Bower has made it clear to his clients that pricing a certain portion of next year's crop is a reasonable strategy at these price levels. He does expect the wheat market to remain highly volatile. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.