Analyst Anticipates Higher Wheat Prices In Coming Months
The recent July WASDE Report lowered global wheat production and tightened ending stocks. Rich Nelson, chief strategist with Allendale, said the market appears to be pricing that into the balance sheet.
“You know, I will say that wheat prices have been a bit off for some time," Nelson said. "We have a tight U.S. balance sheet, but the price has not really reflected that story, and it looks like they're looking more or less at non-U.S. production around the world and non-U.S. exports being a dominating factor. So, it's a story, and aside from today's news in Russia right now, temporarily stopping exports due to Ukraine attacks in one area, we do have a little premium added to prices. But before this, I would suggest we really haven't seen the new crop balance sheet reflected in these current prices.”
Weather Expected To Have An Impact
Lower supplies, Nelson said, will likely begin boosting world wheat prices.
“I do think so," Nelson said. "The key thing I'm going to argue is we might have to wait just a few more months. The El Niño story, or the Super El Niño, whatever you want to call it, will impact harvest numbers out of India as well as out of Australia. So, I do think that the fourth-quarter harvest story, which is what those two countries contribute to, I do think that one will have more of a production cut, and we'll probably get some more dramatic, scary headlines from the newswires, and maybe then some higher prices."
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