Skip to content

Petricca Newsletter “Wheat Are You Long”

WOW!!! What a move!
Spurred by drought in the Dakotas, Minneapolis Spring Wheat has exploded and is now trading at its highest level since July, 2013. After punching out highs July 5th at $8.16 ¼, most of the trade and most of the professionals are saying, “…how did that happen? How did I miss the biggest Wheat move in years?”
Well guess what. I missed it too…kind of.
My newsletter “The Producer” dated February 16th, 2017 was more than specific in recommending Chicago Wheat accumulation at $4.50. (I would love to re-send you that letter, just call). Chicago Wheat traded $5.74 July 5th, 2017, not quite the move we saw in Minneapolis Spring Wheat, but a respectable position.
My letter back in February was titled “WHY WHEAT? WHY NOW?” In it I said, “The bear market for the last four years has come to an end!”
My vision pointed to fundamentals and weather conditions that all of us certainly understood.
1. The outlook forum projected all Wheat planted area at 46-million bushels, down 4.2 million from last year and the lowest level in more than forty years.
2. Back in February, drought concerns were already on traders’ radar.

This is information was available to us all. Unfortunately, very few captured this exciting commodity move due to the “day trader delight”. Bearish sentiment that was already priced in. And certainly, non-belief that a move like this could occur in what has been an oversupplied market for so many years.
I too had no reason to believe Wheat futures could make a move of this magnitude in such a short period of time. Let’s be honest…nobody did.
Only the more astute long-term traders committed to the long-term trend had a chance to participate in the recent “episodic volatility” one needs to have success trading commodities.
While there are many ways to position trade, my long-term practical strategies (LTPS) sets me apart from the norm.
Again, I started long-term accumulation for Wheat futures the beginning of February and I’m still holding those positions as of today.
Very simply, Wheat futures were trading in the lower 25% of the long-term trading range and my long-term formula then turned up.

Source: DTN ProphetX charts

Let me be more specific.
There are four important components regarding my strategies.
1. Positions are established only in the upper or lower 25% of the long-term trading range.
2. Positions are established only when my long-term formula turns up or down within that 25% parameter.
3. Positions are held until positions reach the opposite extreme high or low, or until my long-term formula changes direction.
4. Correct money management strategies must be implemented. No more than three contracts per $10,000.
Let me be clear. My strategies also incur drawdowns. My contention is if one can establish positions at extremes risk is limited.
Take one more look at the chart above. Would you agree that the Wheat bull has just begun?
I have no doubt unless my formula turns down. My projection is for prices to eventually move into the upper 25% of the long-term trading range to $10.00 – $13.00.

Other than the drought of 2017, the longer-term fundamentals also point to a floor in Wheat prices for years to come.
It’s all about food insecurity worldwide.
Soon, even with perfect global grain production, food supplies will dwindle, and will not sufficient to feed the worlds growing population.
Believe it or not there is a need to find food for the equivalent of another India and another China. Increasing productivity will not be the answer.
Check out this video, “Global Food Crisis” from Global Opportunity Network.

Interestingly enough, I just looked up at my screen. September Wheat futures are trading a whopping 25 cents lower, whip-sawing the short-term bulls. Today’s low is $5.11 ½.
Need to go now…Need to buy more!
-Frank Petricca

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The valuation of futures and options may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or implied promise, guarantee, or implication by or from The PRICE Futures Group, Inc. that you will profit or that losses can or will be limited whatsoever. Past performance is not indicative of future results. Information provided on this website is intended solely for informative purpose and is obtained from sources believed to be reliable. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses.

Posted in

Tagged keywords...