The Hueber Report

As I commented a couple of days ago, it seems that we are being fed a consistent stream of news concerning wheat growing issues around the globe, which as it turns out is a very welcome counter-balance the seemingly never-ending threat of new tariffs.  While there has been a lull in action now and again, this has kept the wheat market trudging higher and in turn, brought the corn market in particular along for the ride. By only a small margin thus far, this morning Chicago wheat has poked into a new high for the year and to the highest level traded since last summer.  Today’s update brings us news from Australia, where it is now estimated that the New South Wales state is projected to see production of somewhere between 3.5 and 4.2 MMT compared with a 5-year average of 7.1 MMT.  The most concerning drought condition appear to be on the eastern side of that continent, but the western production areas have been impacted as well. The overall crop is expected to total less than 20 MMT, which is not a dramatic cut from last year’s 21.2 MMT but is significantly below the record crop produced in 2016/17 which tallied 31.8 MMT. Let’s not stop there are there have been additional horror stories coming from Northern Europe concerning that drought with an analyst from Strategie Grains now labeling as “catastrophic.” Almost ironically, the UN food agency reported that the global food price index fell 3.7% in July, and while wheat is by no means the only commodity in the index, you have to wonder if these ongoing problems will not stop further declines in their tracks. As I noted earlier this week, wheat is pressing against key levels of resistance and extending beyond current price levels would suggest that the bull who has actually been subdued for the past six years has finally been released from his confinement.