Welcome to the bulk food market news update.  Drought conditions in Kansas, which is the largest wheat producing state in the U.S., have worsened.  U.S. Drought Monitor reports that about 18% of  Kansas is now in “extreme drought”.

Due to to winter kill and lack of precipitation the winter wheat crop in the U.S. is expected to be only 1.5 billion bushels and the total crop (including spring wheat) is expected to come in at around 2 billion bushels.  Although the U.S. crop should be lower than previously expected, the key to price direction will be global production.

Globally, soil moisture looks very dry from Germany through Eastern Europe and into Ukraine and Russia, although Southern Russia looks good.  Similar dry conditions exist in China, the world’s largest wheat producer. The main wheat growing region in China has picked up moisture in the last few weeks while the northern wheat belt remains parched.  Western Australia, where much of the country’s exportable wheat is grown, looks like an increasingly troubled area.  If El Nino conditions develop then dry conditions could even worsen.

Technically, the wheat market has gained back about 43% of the move down from the July ’12 high to the Jan ’14 low.  Wheat encountered resistance at the $7.25 area but needs a correction after the 31% gain off the Jan ’14 lows.

In the corn market, the big news is the release of a study by the U.N. stating that bio-fuels when evaluated on a net emissions basis have essentially the same carbon footprint as gasoline. Furthermore, bio-fuels create a moral dilemma by causing a competition for land usage between fuel and food.  The study was striking coming from the U.N. and calling into questions the environmental impact of bio-fuels.

Technically, corn has rallied strongly off the monthly trendline.  Corn gained back about 25% of the move down from the Aug ’12 highs to the Jan ’14 lows. Corn has rallied over 25% since bottoming in January.  After such a big move, it is normal for any market to take a rest, as it appears corn is doing now.

Contact us at sales@bulkfoodinternational.com or 816-833-8062 and we can help you get started investing in bulk foods as a tangible asset you have possession of, instead of just a piece of paper.  You can download a copy of our product catalog here.

Weekly Wheat Review

Weekly Corn Review

Wheat rust: The fungal disease that threatens to destroy the world crop

Wheat Declines as Rain Seen Helping U.S. Crops

Wheat Futures Rise as Cold, Drought Threaten U.S. Crop

Dry Getting Drier, Wet Getting Wetter — Drought Monitor

Freeze Could Hit Hard Red Winter Wheat Fields

Weather Starter: Plains Wheat Misses Rain, Midwest Corn Planters Roll

Study: Fuels From Corn Waste Not Better Than Gas

It’s Final — Corn Ethanol Is Of No Use

China’s Rejection Of GMO Corn Has Cost U.S. Up To $2.9 Billion

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