However, now I am minded to take a different view as the Australian ministry of agriculture said wheat prices are set to fall to 15-year lows in 2016-17.
"…The world wheat indicator price is forecast to average lower in 2016–17, reflecting an expected decline in import demand and plentiful supplies in some major exporting countries, …"
Despite a decline in world production, Abares expects that supply will once again outstrip demand.
"…World wheat supplies are expected remain ample in 2016–17, with the rise in opening stocks more than offsetting a forecast decline in production, …If realised, this will be the lowest annual average price in real terms since 2001– 02,..."
Also from Canada, wheat acres came in slightly lower than expected although conditions are reported to be good. The latest acreage estimate from Statistics Canada has the country's wheat sowings down by 3.9%, to 23.2 million acres, slightly undershooting analysts' expectations of 23.4 million acres, down from 23.9 million acres forecast in April of this year.
The pace of sowings was ahead last year's levels, and moisture levels were good in most areas this spring, Statistics Canada said.
Source: www.investing.com, Spotlight Ideas
The chart that follows reveals that deciding to sell now is a big call...however, I am swayed by the combination of longer-perspective technicals and the upbeat supply news from both Australia and Canada. So I am prepared to take on the trade over the medium term.
Wheat 10 Year Chart:
Source: Spotlight Ideas
Management and risk:
Parameters: Wheat September 16 ZWU6 US Cents/Bushel
Entry: Sell 445.50 16:15 BST.
Targets: 428.66 ... 419.17 ... 411.50.
Time horizon: Medium-term.
— Edited by Martin O'Rourke
Non-independent investment research disclaimer applies. Read more