In the first full trading week of the new year, we will be watching for strong moves in wheat ahead of corn and beans. Weather related news focused on Australia should be driving much of the short term volatility in wheat futures as flooding, particularly in Queensland, has severely impacted the current crop, with large areas of the crop being deemed lost by growers (Dec precipitation map below). Field surveys which produced estimates for a reduced crop last month are now being revised downward, as damage to the crop seems to be worse than many had expected. With a very tight market regarding global physical supply, this weather disruption can have effects on price that may last several months. Beyond the impact to wheat futures, we will also be looking at financial impacts to food-related equities as well, anticipating that increases in flour prices will follow and cut into margins across the producing sector.
