There’s a long way to go, but commodity markets are watching U.S. harvest results.


“Early yield reports I’m getting, coupled with the cash basis, is the market, and I are both thinking that USDA has got a low enough yield in these corn and bean numbers at this point," said Mike Zuzolo, founder and president of Global Commodity Analytics.  "And with export demand going down and the Federal Reserve going ballistic, they don't need to put premium in this market unless, I think, something like a wheat rally would happen.”


There is a good chance, he noted, of a rally in the wheat market in the months ahead because of a couple of key factors.


“It wasn't long ago we were dealing with $14 wheat, and I think that's where getting to $14.25 and then falling to $7.50 in a matter of roughly 70 days, you could make the argument with this mobilization of troops that we've taken way too much premium out of the wheat market, especially given the timing of this mobilization (by Russia in Ukraine) when you're A, trying to get corn off the fields and B, trying to plant wheat in both of these countries," Zuzolo said.  "But I think, be that as it may, you have, I think, a weather bull developing or continuing in the wheat market, not just here in the U.S. southern plains, in the hard red wheat belt. But we still have a major issue and a major drought in Argentina, so much so that Argentine farmers in some areas are not planting corn at this point until they get a rain.” 


Zuzolo says drought in North and South America could make things hard on upcoming wheat crops.


"You think about their wheat being in the middle of their crop season right now, you think about us in Kansas and Nebraska wanting to plant wheat but going very slow pace because of no rain and worries about it even sprouting, and then you throw on top of that the Russian risk premium question mark. And then, you throw on top of that the commitment of traders data saying that the funds, the managed money positions, are net short wheat and net long on a bunch of corn, and you have to wonder if they’re out of position at this point because we're going into corn harvest now.”


Reports are coming out that some farmers in the Plains States are literally “dusting” their winter wheat crops into the ground.


“I can confirm that with you because I just talked to a colleague of ours that runs a radio station, farms, and, also, is the state legislator for Kansas. And those were his exact words, that his neighbors in his area were dusting it in, hoping and praying for rain that it would sprout. But there are some areas of Kansas and Nebraska when you look at a 90- or 100-Day precip total versus normal, and they're 12"-15" below normal right now.”


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