CROPS

The wheat market is hunting for a mandate. The highest price of the summer to date is now well more than a month back, on July 23 for Chicago December futures at $9.47 per bushel, and July 20 for white wheat delivered in Portland at $9.05. This week's Chicago is around 89 cents lower and Portland is down about 42 cents. The chart pattern is a (relatively) slow decline in a 20-25 cent range.

It is sometimes useful to look at the wheat market as if it is an independent creature with emotions, motivations and ideas. Right now, the crittur is wan- dering about in a much more relaxed state of mind, still recovering from a hard run up in June and July, but beginning to focus more on actual supply and demand details, rather than imagined disaster and extreme events. There is clearly no major loom- ing threat to wheat supplies, although the ongoing shrinkage in corn and soybean production in the United States is preventing the wheat price from be- ing much more negative.

At this point, the market's attention is mostly on crop progress in the southern hemisphere and on conditions setting up the planting of next year's crop in the U.S.

Big-picture weather factors are in the news stream, suggesting slower-moving prices ahead. The debate tends to concern whether we are facing "La Nina" and "El Nino." La Niña is characterized by unusually cold ocean temperatures in the Equatorial Pacific, compared to El Niño, which is characterized by unusually warm ocean temperatures in the Equa- torial Pacific.

Australia typically produces well with La Nina, and expectations have been raised for this condition emerging this year, but the Australian wheat crop is not receiving the usual La Nina rains. There are forecasts for 2013 to be an El Nino year, better for the U.S. What can we do with this information for trading? Not much, but the market will gnaw on this bone until something more interesting comes along.

Maybe it will be the liquidation of the massive long (bought) position now held by the "non- commercial" speculative funds according to recent CFTC reports.

Meanwhile the market wanders. Uncertainty is not a positive factor, and the reality is that the world is not running out of wheat. The current 30-day trend is still negative.

Information and opinions contained herein come from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable invest- ment. When trading fu- tures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital.