On the yearly chart for wheat, we see the big price move starting in mid-June of 2012, which ultimately shows a move higher of about 21%. Prices moved sideways for the summer and fall, but eventually moved lower at the end of last year, hitting support in early January. Prices have been consolidating between the 7.5 and 8.00 a bushel level since.
As of Feb. 5, the U.S. Drought Monitor classified 92 percent of a
six-state Great Plains region with soil-moisture levels below 20 percent
of normal, including some at zero, with water shortages and crop damage
“The risks to 2013-14 production are still high given the on-going drought conditions in the U.S,” said Erin FitzPatrick,
an analyst at Rabobank International in London. “If we do get slightly
bearish numbers from the USDA it could continue to push prices lower in
the short run, but we think this will open up a buying opportunity.”
improvement in consumption may boost demand for U.S. supplies. Wheat on
the CBOT is about $1.23 a bushel cheaper than the grain on NYSE Liffe
in Paris, compared with a premium of about 71 cents a bushel in July,
according to data compiled by Bloomberg.
We're still in a major drought in the area of the country that grows wheat. Until that changes, I'd be going long wheat right now.
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The Bonddad Economic History Project
At the beginning of 2012, I decided to start looking at the actual, statistical history of the US economy starting in 1950. The reason is simple: to find out what really happened. So, when you see title of a post that begins with a year such as 1957, followed by "employment" or "Fed policy: you know what it's for. You can also access the information by typing in BE for Bonddad econ and a year to find information on a particular year.
Here is a link to pages that contain links to all the posts on the years listed.