January 31: GrainCents Winter Wheat Sales Position Update

Good Afternoon

Today, we’re closing out sales on our 2017/18 winter wheat sales and reducing our exposure of 2018/19 sales as well.

For our Canadian readers, our winter wheat sales also correspond to lower-protein wheats like CPS or soft white or general purpose varieties. 

2017/18 (old crop winter wheat sales)

Moving from 80% to 100% sold, locking in movement within August off the September 2018 futures contracts in Kansas City and Chicago. 


2018/19 (new crop winter wheat sales)

Moving from 30% sold to 50% sold, locking in movement any time between now and the end of September, off the December 2018 contracts in Kansas City and Chicago.


Click here to post your wheat on the FarmLead Marketplace. 


We last made a winter wheat sale back on January 31st, 2018, or about 6 months ago. At the time, there was elevated bullish activity, which we felt was a bit artificial.

6 months later, the bullish activity is due to weather issues affecting production in Europe, the Black Sea, and Australia, as well as some trade policy. 

As has been the style these last few months, protectionism is hitting the country of Ukraine. today the government there came out with conflicting statements. Bloomberg’s reporting explains the fiasco best: 

“Ukraine, the world’s fifth-largest exporter, first issued a statement on Facebook saying it plans to limit shipments of milling wheat after a drought wrecked European crops. The ministry later sought to clarify its position, explaining that it’s not discussing “strict limits” and will discuss projected shipment volumes with traders. The Agriculture Ministry plans to sign a memorandum with traders setting limits for the 2018-19 season. The nation tends to enforce its wheat export limits informally, pressuring grain traders to ship certain volumes, rather than formally issuing a legal document. The effect, however, has been roughly the same, with Ukrainian grain sales capped.” [1]

Today, futures winter wheat prices in Chicago, Kansas City, and Paris all closed about 20 cents lower than their highs of the day. They settled lower because the market basically interpreted the statement from Ukraine as still bullish, as it brings back memories of the 2010/11 crop year when the country restricted exports then. 

Admittedly, from a pure cash sales standpoint, we probably missed an opportunity about 2.5 months ago when winter wheat prices hit multi-month highs. Today though, we’re sitting about 10 cents away from those highs. This cannot be ignored.

2018-08-02-Chicago-Sept-wheat-prices

2018-08-02-KC-Sept-wheat-prices

2018-08-02-Chi-December-wheat-prices

2018-08-02-Kansas-City-December-wheat-prices

We have also been talking extensively in the GrainCents Weekly Winter Wheat Digest about a smaller wheat crop coming out of the European Union. In this coming Sunday’s Digest, we’ll be digging in deeper into Russia and Australia, but the main point is that these smaller wheat crops around the world are getting priced in fairly quickly.

Also keep in mind that we’re still sitting on a very large stockpile of wheat, both globally and within US and Canadian borders. Thus, when the rumors of what final production numbers and trade risk are cleared out, the pure reality continues to show a lot of inventory still out there (and the market will have priced this in accordingly). 

With this move, it puts us at 100% sold on 2017/18 old crop and 50% sold on 2018/19 new crop. If we do see further weather or trade risk rallies, we’ll be able to benefit from them based on our current position.

You should also be cognizant of the possibility of making the first sale of the 2019/20 crop year. These sort of weather risk situations, complicated by trade risk can create short-term opportunities to what I like to call, “sell on the rumor, and profit on the fact”. 

Compared to years past as well, the timing of this sale very smart as the opportunity is extremely unseasonable.

Soft Red Winter Wheat Prices Performance

I’m happy to answer any questions via text, email, or phonecall – my information is below. 

Brennan Turner
President / CEO
1-306-715-4540 (cell)
b.turner@farmlead.com
FarmLead – North America’s Grain Marketplace

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

About the Author
Sarah Bader

Sarah Bader is a science communicator, dedicated to cutting through jargon and getting to the heart of the matter. A lifelong nerd, communications allows Sarah to share her love of science and tech with a wider audience. Sarah has a BA in Communications and Sociology from the University of Ottawa.

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