Jon Scheve is a grain market consultant whose weekly comments are posted on our website and, when they are posted, you should be receiving a notice of his post, just like The Tech Guy. Sunday, we talked about how the corn basis indicates corn futures are too cheap. Jon’s post later Sunday included:
Last week I mentioned the basis market was indicating a potential futures rally. This week the July corn board did increase, and it also rose faster than September futures. This results in a spread increase, which when combined with the huge basis rally the previous week, likely indicates old crop corn futures are still undervalued.
Poet at Fairbank, NE Iowa corn basis last week was 10 under the July; now 35 over July is posted, but they are paying +40 if you ask.
China produces more wheat than any other country in the world and they eat all of it and import wheat. All spring we were told China’s winter wheat crop was the worst ever wheat crop.
The Foreign Agricultural Service of the USDA reports China’s wheat harvest is 50% complete and projections are the wheat crop will make 133 (USDA at 135) million mts this year, down only slightly from 136.95 million mts a year ago and 134.25 two years ago. The country is expected to import an additional 9 (USDA at 9.5) million mts this marketing year. Be advised China’s wheat carryover is more wheat than it produces every year.