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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (1009)	1/17/2002 3:44:32 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Wheat Peak? Export competition jeopardizes three-year high interactive.wsj.com By Jeff Wilson Wheat prices reached a three-year high last week, marking a recovery from the two-year, nearly 70% decline that followed a surge to record highs in 1996. Bullish pundits haven't wavered despite frequent disappointments in recent years and will now see the price ascent as proof that the market is finally responding to the decline in global supplies over the past four years. Signs of stronger export demand have played a part in the rally, but the export outlook is complicated by Argentina's currency devaluation and uncertainty over how China's joining the World Trade Organization will translate into demand. The rally on the Chicago Board of Trade by soft red winter wheat -- the kind used to make cakes and other pastries -- followed a shift to backwardation in December. Backwardation, meaning nearby prices are higher than deferred prices, hadn't occurred in that market since 1996, and for some professional traders was a true signal of an important market shift. ............................................................................................................................... The U.S. Department of Agriculture reported Friday that total winter-wheat acres this season will be the lowest since 1971 at just over 40 million. Kansas, the largest wheat-growing state, is expected to plant the fewest acres of bread-making hard red winter wheat since 1957. Total soft red winter wheat acreage is forecast at 8.3 million acres, down 4% from last year and 13% from two years ago. But Nelson points out that the USDA's forecast for ending stocks of world wheat has been rising for the past five months, moving to 153.4 million in its report Friday from 130.9 million tons in August ............................................................................................................................ What is painfully clear to bulls and bears alike is that China's demand for wheat from any source will be the key to market direction. No one knows whether the lower tariff-rate quotas China accepted when it joined the WTO will lead to actual wheat purchases from the world market. Chinese demand historically has been difficult to forecast, and with shrinking supplies, "it doesn't take much Chinese buying to make the soft-red-winter-wheat story explosive," says Cekander