Long WHEAT - return to the most accepted price

19 de jul. de 2016

In short-term I think wheat is ready to return to balance price.

Positive factors:

+ soaring global ethanol demand;

+ prospects of lower crop inputs in the face of falling profitability;

+ strong recovery in global feed demand (USDA hiked by nearly 11m tonnes to 144.4m tonnes its forecast for world feed use of wheat in 2016-17. That's the second highest figure in record);

+ increased investor interest on return to multi-year lows;

+ price dynamics (I believe wheat is still in balance and expect it to return to the most accepted price of 475);

Negative factors:

- inventory forecast at a record high (253.7 tonnes);

- strong dollar;

- strong El Niño episode may point to a 2016 winter wheat yield above trend, possibly well-above, and a two-thirds chance of the average spring wheat yield to be modestly above trend;