Wheat Outlook
April 18, 2016
Volume 25, Number 24
Market Situation
Today’s Newsletter
Market Situation
Crop Progress
1
Weather
2
Commitment of
Traders
Crop Progress. It will take another week to better assess the
impact of this weekend’s storms on the wheat crop, but condition
ratings released today show slight improvement in the U.S. winter
wheat crop. The crop condition index is up 2 points on a 1%
increase in the excellent category and a 1% decrease in fair. The
crop index score stands at 355; average this time of year 336.
%
2016 U.S. Winter Wheat Crop Condition Ratings
CCI
100
3
500
90
450
80
400
Marketing Strategies
2016 Wheat
Marketing Plan
5
70
350
60
50
300
40
250
30
200
20
150
10
0
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
6
Very Poor
Poor
Fair
Good
Excellent
2015
100
Average
The Texas wheat rating slipped one point, down to 338, but is still
well above the average of 300. There was a one percent move
from wheat rated excellent down to good.
%
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 18, 2016
Volume 25, Number 24
Weather. Heavy rain from central Texas, across most of Oklahoma, the western 2/3rds of
Kansas, and up into Nebraska has been recorded in the last several days. This rainfall activity is
expected to move out by the end of the week.
Precipitation Forecast (http://www.wpc.ncep.noaa.gov/qpf/day4-7.shtml):
Days 1-3
Day 4-5
2
Wheat Outlook
April 18, 2016
Volume 25, Number 24
In the ENSO update today from the Climate Prediction Center, a La Nina Watch was added to
the system status alert. The actual weekly sea surface temperature departure was unchanged
from last week at +1.3°C. The average of forecast models was extended this week out to next
November/December/January. It shows an average sea surface temperature departure this fall
of -1.5°C, deep in the La Nina range.
Oceanic Nino Index (ONI)
ENSO Alert System Status: El Niño Advisory/La Nina Watch
A strong 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, 18 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 increases in bullish bets in corn and
soybeans and an increase in bearish positioning in wheat. Soybeans are still the only market
that is net long. The change in corn came more from fewer traders wanting to be short,
-21,936 contracts, rather than a strong move to be bullish, +7,284 longs. Contrast this to the
soybean market where the change was driven by traders wanting to be long, +19,860, and a
decline in short contracts of 3,880. Both wheat markets showed strong increases in short
contracts last week, many of which may have been offset today as Chicago and Kansas City
wheat both showed strong price gains.
3
Wheat Outlook
April 18, 2016
Volume 25, Number 24
Managed Money,
net long positions
Corn
22-Mar
29-Mar
5-Apr
12-Apr
net change
(163,659)
(116,502)
(175,604)
(146,384)
29,220
Soybeans
52,853
70,155
70,278
94,018
23,740
Chicago Wheat
(82,063)
(71,935)
(70,394)
(115,957)
(45,563)
KC Wheat
(11,304)
(12,283)
(11,662)
(20,465)
(8,803)
Total
(204,173)
(130,565)
(187,382)
(188,788)
(1,406)
Wheat, Corn, and Soybeans Speculative Investment
Net long contracts
¢/bu
800,000
700
680
600,000
660
400,000
640
620
200,000
600
0
580
560
-200,000
540
-400,000
520
-600,000
500
Index Funds
Managed Money
Price
Source: CFTC, 4/15/2016
4
Wheat Outlook
April 18, 2016
Volume 25, Number 24
The spread between old crop May Kansas City wheat and new crop July is still just above 10
cents. With a cost of carry from May to July of 12 cents (2 months at 6 cents per bushel per
month), this calculates to a percent of carry of 85%, a number that is in the commercial market
bearish range (carry <33% bullish and carry >66% bearish).
II Qtr 2016
May ’16 KC Wheat
4.7775
1-Apr
18-Apr
net change
% change
Jul ’16 KC Wheat
4.8850
4.7500
(0.1350)
-2.76%
Difference
0.1075
0.1025
(0.0050)
Nearby % Carry
May to Jul
Jul ’17 KC Wheat
90%
85%
-4%
5.4875
5.4200
(0.0675)
4.6475
(0.1300)
-2.72%
-1.23%
Marketing Strategies
2016 Wheat Marketing Plan. July KC wheat has closed higher for 5 consecutive days. I made
my most recent sale on modest seasonal price strength and intend to do the same again
between now and late May. I will price the final 30-40% at harvest.
July 2016 KC Wheat and Marketing Plan
¢/bu
700
Early Season Price Rally / Early Crop Conditions
Emerging from Dormancy/Late Season Conditions
Harvest
650
600
550
500
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
10/9/2015: Sold 15% at 536½
3/7/2016: Sold 15% at 486
5
Wheat Outlook
April 18, 2016
Volume 25, Number 24
Upcoming Reports/Events.
April 22
May 3 & 4
May 10
May 20
Cattle on Feed
Grain Grading Workshop, Amarillo
WASDE
Short-term Energy Outlook
Cattle on Feed
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
6