Bullish Wheat?
An Alert was sent to me last Friday:
Two ships containing 40 tmt and 50 tmt of feed wheat from Brazil is said to be waiting to offload on the East Coast. The wheat is sourced out of Brazil. Now Brazil is a net importer of wheat. Just tells you how over priced US wheat is.
To me, this is an example of the long term supply and demand pendulum swing through markets.
If you remember, many pig “farmers” in South America gave up their pigs and started grain farming when prices were at their zenith in June of 2008. High grain prices cut deeply into profit potential especially in other countries where there is less subsidy as in the U.S.A. Subsequently, all cattle producers were forced to absorb increases as meat prices were falling.
The exporting of wheat is due to more farmers growing wheat and fewer end users of the feed grain in South America. Ninety thousand metric tons of wheat is a substantial amount to export for a net importer. Is the grain being exported to take advantage of high prices and a strong dollar with the intent of buying it back later, cheaper? Or is it a true indication of the glut of the wheat market confirming trend direction for 2010? Either way, it isn’t bullish.
