ALLENDALE, INC.
4506 Prime Parkway, McHenry, Illinois
800-262-7538
(March 15, 2002) WHEAT: Fundamentally we remain neutral to long-term bearish to wheat. Today was a big day for funds to cover shorts. Funds were so ridiculously short and decided to not only correct oversold technical signals, but take futures up to staunch resistance. The 2001/02 marketing year has less than 21% remaining.
Wheat Export Commitments
Last updated 3/14/02.
Australia increased their new-crop harvest estimate. Though Argentina remains in economic chaos the longer they hold their new-crop wheat, the darker that cloud becomes as it approaches a time when seasonal rains have their best opportunity to pull the Kansas what crop from complete ruin. Even though USDA dropped export potential down to 975 million bushels from 1 billion our export sales pace remains 15% behind the five-year average. You know we do not place as much emphasis in corn exports as they only account for about 20% usages of the 2001 crop. However, the export usage from the 2001 wheat production accounts for 50%. In this crops case, exports do matter a bunch. Increased global availability and improving conditions from many countries which suffered drought last year have us long-term bearish to wheat. Our three-year average study on July futures suggest March offers a price range of about 2720 to 2880, but has had the ability to break 2700 half way through April. We have 40% of our new-crop hedged and will leave a just in case hedge order at the 2950 level for another 10% of prospective new-crop production. Our short 2800 May wheat call risk was hit for a near scratch trade on Thursday. We wrote and entered orders to sell July futures up against resistance of 2880 and approaching overbought technical conditions.
Joe Victor www.allendale-inc.com