Wheat may rise relative to corn because of possible damage to wheat crops in Ukraine and Russia, after a cold snap in the past winter and recent dry weather, he wrote today in his daily Gartman Letter. Wheat futures touched an eight-month high on the Chicago Board of Trade on May 21 before retreating, leaving the most-active contract little changed this month. Kansas City Board of Trade wheat gained about 1.6 percent in May, while corn tumbled 12 percent on the outlook for rising supplies.
“In the past when the Ukraine and/or Russia had problems with their crops, we’ve seen wheat properly trading several dollars premium to corn,” Gartman wrote. “It should again, and so we’ll buy one unit of hard red winter wheat in Kansas City and one unit of soft red winter wheat in Chicago and sell an equal bushel sum of corn against it.”
Russia is expected to be the world’s fourth largest wheat exporter in the 2012-13 season, behind the U.S., Australia and Canada, according to the U.S. Department of Agriculture.
The agency estimated Russia’s wheat crop to be 56 million metric tons, down 0.4 percent from a year earlier on May 10. The USDA pegged the U.S. corn harvest, the world’s biggest, at a record 14.79 billion bushels.
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