Wheat Outlook
April 25, 2016
Volume 25, Number 26
Market Situation
Today’s Newsletter
Market Situation
Crop Progress
1
Weather
2
Crop Progress. Condition ratings released today show another
week of improvement in the U.S. winter wheat crop. The crop
condition index is up 4 points on a 1% decrease in very poor and
fair and a 2% increase in the good category. The crop index score
stands at 359; average this time of year 335.
%
Commitment of
Traders
2016 U.S. Winter Wheat Crop Condition Ratings
CCI
100
4
500
90
450
80
400
Marketing Strategies
2016 Wheat
Marketing Plan
6
70
350
60
50
300
40
250
30
200
20
150
10
0
100
25-Oct
1-Nov
8-Nov
15-Nov
22-Nov
29-Nov
6-Dec
13-Dec
20-Dec
27-Dec
3-Jan
10-Jan
17-Jan
24-Jan
31-Jan
7-Feb
14-Feb
21-Feb
28-Feb
6-Mar
13-Mar
20-Mar
27-Mar
3-Apr
10-Apr
17-Apr
24-Apr
1-May
8-May
15-May
22-May
29-May
5-Jun
12-Jun
19-Jun
26-Jun
7
Very Poor
Poor
Fair
Good
Excellent
2015
Average
The Texas wheat rating gained 6 points, up to 344, well above the
average of 294. There was a 3 percent move from wheat rated
fair up to excellent.
%
2016 Texas Winter Wheat Condition Ratings
CCI
100
500
90
450
80
400
70
350
60
50
300
40
250
30
200
20
150
10
0
100
10/25
11/1
11/8
11/15
11/22
11/29
12/6
12/13
12/20
12/27
1/3
1/10
1/17
1/24
1/31
2/7
2/14
2/21
2/28
3/6
3/13
3/20
3/27
4/3
4/10
4/17
4/24
5/1
5/8
5/15
5/22
5/29
6/5
6/12
6/19
6/26
Upcoming
Reports/Events
Very Poor
Poor
Fair
Good
Excellent
2016
Average
1
Wheat Outlook
April 25, 2016
Volume 25, Number 26
Weather. Much of the hard red winter wheat production area has received abundant rainfall in
April. The forecast calls for most of the Texas and Oklahoma Panhandles, western Oklahoma,
western Kansas, and southeast Colorado to be dry the next several days, but rain is back in the
forecast for later this week.
Precipitation Forecast (http://www.wpc.ncep.noaa.gov/qpf/day4-7.shtml):
Days 1-3
Day 4-5
2
Wheat Outlook
April 25, 2016
Volume 25, Number 26
In the ENSO update today from the Climate Prediction Center, the alert system status was
unchanged: El Nino Advisory with a La Nina Watch. The actual weekly sea surface temperature
this week cooled 0.2°C moving the departure from normal from +1.3°C last week to +1.1°C. The
average of forecast models shows the three month temperature deviation falling below the La
Nina threshold in June/July/August and an official entry into La Nina conditions by
October/November/December.
Oceanic Nino Index (ONI)
ENSO Alert System Status: El Niño Advisory/La Nina Watch
El Niño is present and weakening (temperature above the +0.5° threshold for 5 consecutive overlapping 3-month seasons).
Positive equatorial sea surface temperature (SST) anomalies continue across most of the Pacific Ocean.
A transition to ENSO-neutral is likely during late Northern Hemisphere spring or early summer 2016,
with an increasing chance for La Niña during the second half of the year.
°C
3.0
2.5
Actual Measurements
Predicted
2.0
1.5
1.0
El Nino
0.5
Latest actual weekly
SST departure
Neutral 0.0
-0.5
La Nina
-1.0
-1.5
-2.0
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 25 April 2016
http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
The updated Seasonal Outlook (4/21/2016) continues to call for above normal moisture
conditions across the southern U.S. for May, June, and July.
3
Wheat Outlook
April 25, 2016
Volume 25, Number 26
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 25 April 2016
http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
Commitment of Traders. Futures positions held by Managed Money traders in the grain
commodity markets reported last week by the CFTC show a move to more bullish bets for every
commodity, though soybeans were still the only market where longs outnumber the shorts.
Corn saw the biggest shift in positioning as there was an increase in long contracts held of
26,955 and a decrease of short contracts by 90,157. Both wheat markets showed strong
increases in short contracts the week before and managed money traders offset many of those
short positions in this report, but not all. The week of April 12, short contracts in Chicago and
KC wheat increased by 45,001 contracts; as of April 19, shorts decreased by 21,510.
Managed Money,
net long positions
Corn
29-Mar
5-Apr
12-Apr
19-Apr
net change
(116,502)
(175,604)
(146,384)
(29,272)
117,112
Soybeans
70,155
70,278
94,018
129,884
35,866
Chicago Wheat
(71,935)
(70,394)
(115,957)
(89,658)
26,299
KC Wheat
(12,283)
(11,662)
(20,465)
(13,755)
6,710
Total
(130,565)
(187,382)
(188,788)
(2,801)
185,987
4
Wheat Outlook
April 25, 2016
Volume 25, Number 26
Wheat, Corn, and Soybeans Speculative Investment
Net long contracts
¢/bu
200,000
700
680
100,000
660
0
640
620
-100,000
600
-200,000
580
560
-300,000
540
-400,000
520
-500,000
500
Managed Money
Price
Source: CFTC, 4/22/2016
The spread between old crop May Kansas City wheat and new crop July is still near full carry.
With a cost of carry from May to July of 12 cents (2 months at 6 cents per bushel per month),
the current carry of 11¼ cents calculates to 94% of carry, a number that is in the commercial
market bearish range (carry <33% bullish and carry >66% bearish).
II Qtr 2016
May ’16 KC Wheat
1-Apr
4.7775
25-Apr
net change
% change
Jul ’16 KC Wheat
4.8850
4.7375
(0.1475)
-3.02%
Difference
0.1075
0.1125
0.0050
Nearby % Carry
May to Jul
Jul ’17 KC Wheat
90%
94%
4%
5.4875
5.3725
(0.1150)
4.6250
(0.1525)
-3.19%
-2.10%
5
Wheat Outlook
April 25, 2016
Volume 25, Number 26
Marketing Strategies
2016 Wheat Marketing Plan. I added to new crop wheat sales last Tuesday as the July KC
contract hit the top of the recent trading channel at 490 and closed lower at 487.75. We did
continue higher after that but have now fallen back into the previous range. This brings me to
45% priced on the 2016 crop. With another price move higher I would price an additional 15 to
20% but intend to hold 30-40% until harvest.
6
450
4/1/2015
4/13/2015
4/22/2015
5/1/2015
5/12/2015
5/21/2015
6/2/2015
6/11/2015
6/22/2015
7/1/2015
7/13/2015
7/22/2015
7/31/2015
8/11/2015
8/20/2015
8/31/2015
9/10/2015
9/21/2015
9/30/2015
10/9/2015
10/20/2015
10/29/2015
11/9/2015
11/18/2015
11/30/2015
12/9/2015
12/18/2015
12/30/2015
1/11/2016
1/21/2016
2/1/2016
2/10/2016
2/22/2016
3/2/2016
3/11/2016
3/22/2016
4/1/2016
4/12/2016
4/21/2016
5/2/2016
5/9/2016
5/16/2016
5/23/2016
5/30/2016
6/6/2016
6/13/2016
6/20/2016
6/27/2016
7/4/2016
7/11/2016
Wheat Outlook
April 25, 2016
Volume 25, Number 26
July 2016 KC Wheat and Marketing Plan
¢/bu
700
Early Season Price Rally / Early Crop Conditions
May 3 & 4
May 10
May 20
Emerging from Dormancy/Late Season Conditions
Harvest
650
600
550
500
10/9/2015: Sold 15% at 536½
3/7/2016: Sold 15% at 486
4/20/2016: Sold 15% at 489½
Upcoming Reports/Events.
Grain Grading Workshop, Amarillo
WASDE
Short-term Energy Outlook
Cattle on Feed
7
Wheat Outlook
April 25, 2016
Volume 25, Number 26
Mark Welch, Texas A&M AgriLife Extension Economist
600 John Kimbrough Blvd, Suite 335
College Station, Texas 77843
Tel. (979)845-8011
Fax. (979)845-4906
JMWelch@tamu.edu
The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as
part of the Texas A&M AgriLife Extension Service. The author and Texas A&M AgriLife Extension Service assume no liability
for the use of this newsletter. Educational programs of the Texas A&M AgriLife Service are open to all people without regard
to race, color, sex, disability, religion, age, or national origin.
The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas
Cooperating
8