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| Is the wheat rally over?
The wheat market led us rallying higher overnight, we even actually put in new highs and were up nearly +30 cents at one point. Soybeans were up +20 cents.
Only to get hammered and fall well off those highs. Ending the day in the red across all the grains.
We saw some of the results from the Kansas crop tours being a little better and technical selling after failing to hold those gains.
The biggest thing was a buy the rumor sell the fact story from the Russian wheat.
This has been a big headline surrounding wheat. Today we finally got confirmation and saw some estimates lowering that crop.
Yet we traded lower on bullish news.
Now that isn’t a great sign and leaves a little sense of perhaps this wheat market is done rallying for a little while.
Todays price action was awful, but I don’t put too much into the actual movement today. Given the recent volatility we have seen. Being down yesterday makes todays action a little less bearish. Essentially trading in a 3 day range and still higher on the week.
Long term I see plenty of upside in wheat. Short term I could definitely see us struggle for a while.
Nobody knows if this is a fear driven wheat rally due to crop sizes or if it is a demand driven one.
Most don’t think it’s a demand driven one.
But one thing I’m looking at is the world carryout year over year decreasing yet production is increasing.
This tells me that perhaps there is a little more demand behind this than some think. Again, I’m a bigger fan of wheat long term. The potential upside long term is exponential.
If you are in that situation where you know you’re going to have to move something soon. Know you’re going to need cash flow. Don’t have storage. Can’t afford to be patient or wrong. Then consider rewarding the rally.
If you are in the camp where you see the possibility for wheat to go much higher and don’t want to miss the boat, then consider being proactive.
If you can’t get the courage to make a sale, consider using a put to give you a worst case scenario.
Or maybe make a sale and own a call to keep some of the upside open. If we go lower you made a great sale and you lose the call. We go higher you make money on the call. Those are some simple tools you can use.
Nobody has a crystal ball. It’s called hedging, not guessing…
Listen to todays audio where we go over exactly how you should be managing your risk in these markets and some scenarios these grains could see
Listen Here: https://txt.so/8hi6ZW
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Is wheat rally over? Hedging not guessing - market comments
