CROPS

The fundamental statistics around wheat produc- tion and consumption in the U.S. have a bottom line: USDA projects 698 million bushels as an "ending stock" level of wheat for this year. The con- sumption of wheat as a feed source was larger than expected because of such high corn prices in the last quarter, which is what led to the decrease in the Sept. 1 USDA stocks report that surprised the trade into a 44-cent price rally the day of the report.

Beyond that short-term (one-day) rally, the price of wheat has returned once again to the bottom of the now very well established range. Unless a strong factor emerges in the world in the next few weeks, wheat is unlikely to establish any significant new highs or lows.

The Chicago wheat price chart pattern is sideways and has been now for 13 weeks. The great thing about a market that has had so long to think about its balance is that when it does change patterns, it will be relatively easy to identify the moment that it happens. The size of the range back to mid-July, with its $9.44 high and $8.52 low, allows a simple projection of about 80 cents per bushel in either direction once the range has been penetrated. This week the projection is for the front futures month for Chicago to break downward, not re- ally a failure, but an event that could spoil the last few wheat sales fun for the year for some producers who have not yet let it go.

The hope for higher prices rests almost entirely on weather in Argentina and Australia. Drought in the outback could be a factor, but is not yet. Reduction in Argentina's wheat acreage is also still only an idea. On the other side of the coin (export sales from the U.S.), Russia appears to have oversold their production and will surely slow their sales into year-end. We must see U.S. exports increase from the present pace to hit USDA projections. All of the above are fuzzy at best right now, so the negatives are just enough to shadow a decline out of the sideways trend.

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