By Hernán Fernández Martínez independent consultant
Hello Gentlemen; The week that ended was almost exclusively devoted to wheat growing, due to the positive price change both in the Chicago market and in our local market. Let's first look at what has happened recently, then talk about the causes, and finally, let's do what really matters, suggest what to do in this situation.
By changing the position of wheat on January 19 in the futures market of Buenos Aires, during the seven months that we were in 2018, we see, then, the price variation we are talking about [19659004] Changes in the price of wheat January 19. ” observer=”” data-observer-function=”loadLazyImg”/>
Changes in the price of wheat January 19.
During Over the last seven months (2018), the price of the reference position has fluctuated sharply, but has risen sharply if we badyzed the "tip to tip", it is ie 34 US $ / tn (+ 20%). If we shorten the observation period, we will see that during the month of July, the January 19th price increased by US $ 26 (+ 14%) and US $ 9 / tn (+ 5%). %) last week. During the year, the price of wheat on the Chicago market, compared to the December position, changed similarly from US $ 177 to US $ 204 from US $ 27 to US 274.
Here is the description of the "consequences" easily observable, but look a little further to the "Mundo Triguero" to try to reveal what is happening. The observed reality, through the July report of the USDA (United States Department of Agriculture), shows us that both the European Union and the countries that make up the former -Soviet Union will have strong production cuts compared to last season. The first block of countries would have a production decline of about 6.6 million tons. (-4.35%), and the former Soviet 21 million tonnes (-15%).
But let's look deeper still; Cooling before price movements occurs, among other causes, when production or production losses occur in countries that are heavily involved in world trade in the product in question. And here is the point that we want to affirm to get to the bottom of the situation; Europe and the former Soviets now account for 47% of world wheat exports; 15% and 32% respectively. And among the last to stand out very visibly Russia; Ukraine and Kazakhstan with 34; 16.5 and 8.5 million tons of exports, respectively.
In Argentina, a very good wheat crop is expected
. these blocks of countries are undergoing an unprecedented heat wave, as well as all of Northern Europe, which has raised temperatures to unusual levels during the boreal summer, verifying up to 30 ° C in the Arctic Circle, north of the Scandinavian Peninsula. This seems absolutely delusional affects the end-of-life wheat in the blocks of exporting countries described; The news fires affecting the market, as Russia could suspend its wheat exports to ensure domestic supply, trying to avoid triggered in the price of bread.
In short, up to now the brief description but now we go to questions of the week; What do we do with January wheat at US $ 200 / tn? Will he continue to increase? And again we return to the usual; Of course, it can continue to increase … or not … that's why we wonder how these prices leave us in the 18-19 budgets this price? Without a doubt, excellently well both in the wheat areas and in the low latitudes where we badyzed the wheat / soy 2 ° business; why, without a doubt, the suggestion is to sell! At least 30% of the estimate of production; But buy APPEALS on January 19 to ensure flexibility to the old and beloved Forward and accompany through this, any additional increases. As an example, we had Friday the CALL of U $ D 219 paying U $ D 5,10
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