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(March 26, 2002) WHEAT: New near-term highs were scored by the wheat, amidst talk of crop damage in the Plains and a Chinese crop that may be in trouble due to disease. It has been dry in the Plains, and with the crop emerging from its dormant state, may be more vulnerable than usual. That said, wheat is a hardy plant and often surprises those who hope for bull markets.

Funds have been very short. It is very possible that much of the recent rally has come from them covering short positions due to worries that the weather problems for wheat are real, or in order to even the books a bit in advance of the USDA report. Still, the chart is beginning to look promising.

China reported disease problems in four areas. Officials said that the problem, stripe rust, has the potential to spread to other areas as well. China is also seeing drought problems in the northern part of the country.

The USDA forecast for all wheat planted acreage is expected to come out at 59.59 million acres versus 59.60 last year. Wheat stocks are seen at 1.174 average, with a range of 1.155-1.185 billion bushels. The last report called for 1.623 billion bushels, and the year ago report called for 1.340 billion bushels. Numbers much outside of the range may be able to move the market, but it appears to be a more or less neutral report.

 

M. Steven Morgan

www.commodityreview.com

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