Following drought conditions in the western plains this winter, our forecast of improved weather conditions from Texas to Kansas has been on “primary factor” in the collapse in wheat prices compared to corn over the last 6 weeks. No question the wheat market has a huge short position in it, making it vulnerable to short covering. Talk of dryness in Western Europe and frost in parts of the Ukraine and Europe are not really enough to change the large global stocks situation for wheat.

The grain market will begin to pay much more attention to corn planting. While it is rare to have a bull market in corn on wet weather delays in spring, it has happened before. The worst flooding ever was during the 1993 El Nino.

Shown below is our Climatech program which more than 6 weeks ago predicted wet Midwestern weather through at least April. This will slow plantings in states like Iowa, Missouri and parts of Illinois into early May, but continue to benefit wheat.

Traders will also be watching Minnesota and North Dakota where wet weather could delay spring wheat planting and weekend flooding in Oklahoma to Illinois. Any frost talk in the Plains or dryness of frost expanding into Europe or Russia would be bullish the wheat market, but for now, most global conditions have been ideal. In addition, scattered areas of frost may occur this week in N. Kansas and more so later this weekend from Texas to western Kansas and Oklahoma.

 The world awash in wheat, but given the big short position in the market, some profit taking and short-covering could concern due to the “psychology” (more than anything else) about the U.S. crop now improving as quickly.

What is the longer term trend in wheat on weather? That information is available only for subscribers.

CLIMATECH AND APRIL GLOBAL RAINFALL

Climatech—Notice the dryness in far NE Brazil (red) and wet weather (blue) from California to the U.S. wheat and corn belt. The heavy rains over Peru and Ecuador have been historic in some areas. This was forecasted by Climatech, well over a month ago. For more information go here https://www.bestweatherinc.com/products/

 

Long Corn, Short Wheat spread. Will this spread continue to work? It all depends on the weather the next few weeks in the Midwest and in Europe> if wet weather lasts through the month of May, then more soybean acres will be planted, which would be bearish.

 

Traders will be watching for signs of further corn planting delays and how germination is going, the next 4 weeks. A wet weather pattern will cause concern for at least 1-2 weeks. Will it last?

Our upcoming newsletter (still a few months a way from publication), will address these issues for investors.

U.S. Corn Planting Progress