This week, I will choose to go long on wheat for a short term. There will be no 11 open contracts situation any more.

According to the report from Agrimoney.com “Grain stocks held by major exporters are to fall to the tightest since the season that corn broke above $5 a bushel for the first time, and wheat above $7 a bushel, the International Grains Council, cutting further its supply forecasts.”

From demand aspect, “China imported 524,156 tonnes of wheat last month, a rise of 196% on September last year, customs officials said.”   This put a huge upward pressure on the price of wheat.  Here is the graph of China Wheat production.

The production growth of 2012 is only 0.07% compared to 2011.   Furthermore, USDA’s October supply and demand estimates indicate that livestock producers will look to cheaper substitutes for high-priced corn, which should result in stronger demand for wheat.

Compared both the result of technical analysis and fundamental analysis, I believe the price of wheat probably break the moving pattern in next week. The price of wheat is highly likely to go up in the next week.

Reference:

http://southeastfarmpress.com/grains/high-corn-prices-could-bump-demand-wheat

http://www.agrimoney.com/news/surge-in-chinese-wheat-imports-to-set-a-trend–5139.html

http://www.agrimoney.com/news/top-exporters-grain-stocks-to-fall-to-17-year-low–5147.html

http://southeastfarmpress.com/grains/chinese-demand-helping-prop-us-wheat-prices