‘Extreme’ volatility expected in wheat markets this spring

(Stephen Ausmus photo courtesy ARS/USDA)

Winnipeg | CNS Canada — Canadian and U.S. wheat markets are likely going to experience some “extreme” volatility this spring, Lawrence Yakielashek of FarmLink Marketing Solutions told the Wild Oats Grainworld Conference.

“The spring months are when the firecrackers are going to start to hit the match,” he added.

He predicted there would be a lot of volatility in markets this spring because unknowns surrounding political and weather events have the bears on high alert and are causing anxiety.

There will likely be a battle between bullish and bearish factors in the wheat markets, including increasing global consumption on the supportive side and large global supplies on the other.

He predicted a tipping point soon that will lead to a bear and bull standoff, which will likely lead to the “fireworks”.

Though global production continues to increase, consumption is also growing, he said. Over the past five years, wheat consumption has jumped by nine per cent, and could increase another 2.1 per cent for 2015-16.

To put that into perspective, current world consumption is at 1.95 million tonnes per day, Yakielashek noted.

Other things traders will watch for include any changes in weather in the Black Sea region, and further news about political problems that don’t seem to be improving in the area.

Weather in the European Union will also be a key factor, as will conditions for North American seeding and the global demand situation.

Though there may be some volatile moves this spring, Yakielashek said he believes the market has hit a plateau and is likely to hold reasonably rangebound over the next five years.

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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