"Expectations for the year 2015 are getting more clear.  The production will still be high.  In addition, one of the top topics on the agenda of the year 2015 will be the changes in the exchange rates and decisions to be taken by FED.  We will see the reflections on futures.  Respectively, 520 and 480 cent/ bushel levels are prominent in the downward trend of the wheat prices payable on March.  For the present, I do not expect upwards trend to exceed the 565-570 cent/bushel level." Zafer ERGEZEN Futures and Commodity Market Specialist contact@zaferergezen.com Wheat market started the year 2015 with losses once again. High increase experienced in the final period of the year 2014 left its place to sales with the increase in production estimations.  The value of the American dollar continues to increase thus we see an increase in the sales pressure as a consequence of the increased expectations towards decline in the global liquidity and increase in production estimations.  Another negative aspect is the increased transaction volume due to sales.  USA meets 16 percent of the global wheat exports while it produced only 7.6 percent of the global wheat production.  Countries other than USA and Canada produce 88 percent of the global wheat production.  Therefore, the fact that the value of American dollar increases is important for the global wheat price.  We can say that liquidity in the markets declined and positions are reviewed since USA Federal Reserve Bank (FED) decelerated the monetary expansion policy.  Investors started to adjust their positions in accordance with the new economic order.  However, production estimations still remain as one of the most important indicators for the investors.  The changes in the production estimations continue to have deterministic effect on the wheat prices. THE NEW YEAR IS PROMISING FOR TURKEY Turkey is still one of the countries following a steady course in wheat prices.  Changes in the prices of commodity exchanges are at reasonable levels and price fluctuation is not very high.  In case price remain at these levels, it is likely that intervention purchase prices shall not be announced as in the last year.  The drought experienced in Turkey stopped further decrease in wheat prices in 2014.  Turkey reached a plateau in wheat prices while the wheat prices all over the world were in decline.  In the next period, we can witness slight decrease in the prices.  Because Russia stopped issuing grain export certificate for countries other than Egypt, Turkey, India and Armenia as of 17th December.  However statements indicate the possibility of starting exports for Turkey with the enactment of the recently announced tax policy.  In this case, an increase in the wheat imports from Russia is expected which would lead to an increase in the cheap wheat entering into the market in return.  This may lead to a slight increase in the pressure on prices.  In addition, rainy season in Turkey is supportive for the wheat production although it is a negative situation for some crops.  The snowfall is expected to increase the yield of this year.  The picture is relatively promising for this year despite the fact that wheat did not turn green on fields in most of the regions in the previous year.  2015 estimations indicate an increase in the wheat yield in Turkey when compared with the previous year. CHINESE ECONOMY MAY AFFECT THE WHEAT DEMAND The projection report published by USA Department of Agriculture (USDA) indicated an increase of 1.2 million tonnes in the volume of wheat production when compared with the previous month.  Thus the production volume increased to 723.38 million tonnes.  It is seen that there has been an increase of 65.44 million tonnes when compared with the year 2012 and higher yield expectation relative to 2012 continues.  Therefore, a downwards long-term trend is expected even if short-term fluctuations are experienced.  Particularly upward increase in estimations may lead to an increase in the volume of sales.  In addition, there is an increase of 26.34 million tonnes in the first projection report announced for 2014/15 season. Such an increase is higher than the annual wheat yield of Turkey.  In this case, the increase in the pressure on sales is inevitable in the presence of such a high leap. End-of-period stocks increased by 1.1 million tonnes and reached to 196 million tonnes.  There is an increase in the production, however end-of-period stocks follow the same trend.  This situation shows that there has not been a substantial change in the demand.  In a market with steady demand, projection reports are the most important indicator for investors.  The increases seen in USA and Russia reflect as the increase in stocks at the end of the period.  USA does not expect any changes in the production and the increased value of the American dollar reduced the demand.  The increase in stocks of Russia was expected naturally as a result of the restrictions implemented on wheat exports by this country on December.  The increase in exports is a result of the increase in the production.  In consideration of the aforementioned data, we see that a well-balanced projection report has been produced. As usual, China is leader in the consumption end of the equilibrium.  Estimations indicate that the wheat consumption of China will be 126 million tonnes.  In other words, China will consume 17.4 percent of the wheat production on its own.  32 percent of the global wheat stocks are owned by China.  Therefore the deceleration in the economy of China may be seen as a negative factor on the global wheat demand.  However, this expectation has not been reflected in the projection report.  There may be a slight decline in the next projection reports. INCREASE IN END OF PERIOD STOCKS International Grain Council (IGC) did not change its estimations on global wheat production when compared with the previous month.  Global wheat production is expected to be 717 million tonnes.  There is an increase in the production volume of Canada and Europe.  The most significant aspect of the IGC estimations is the decline of 4 million tonnes in the demand when compared with the previous anticipation.  In other words, IGC anticipates global wheat consumption to decline to 708 million tonnes.  Thus end of period stocks will increase by 3 million tonnes and reach to 196 million tonnes when compared with the previous year.  As a result, end of period estimations of USDA and IGC have been equalized. It is seen that the restrictions of Russia on wheat exports have higher influence on production estimations of IGC.  The decline in Russian exports would lead to an increase in the shipments made from other countries.  The strongest candidates will be the European countries and Kazakhstan.  The report indicates positive conditions for the production in Turkey.  This situation coincides with my positive expectations for the year 2015. EXPECTATIONS TOWARDS PRODUCTION INCREASE CONTINUE Estimations of the World Food and Agriculture Organization (FAO) indicate that the wheat production will be 724.9 million tonnes.  This shows that there has been an increase of 2.3 million tonnes in the expectations when compared with the previous month. Production increase in Europe and Russia contributes to this figure.  FAO decreased its production expectations for Turkey, however the new projections are still above the levels of the previous year.  In addition, I believe the estimations for Turkey will increase in the new FAO projection report to be announced.  FAO report states that the end of period stocks will increase by 500 million tonnes and reach to 192.7 million tonnes when compared with the previous month. In conclusion, average of the estimations announced by three organizations for the global anticipations in the grain markets indicates a global wheat production of 721.76 million tonnes.  This figure shows an increase of 1.61 million tonnes when compared with the previous month.  Production estimations of three organizations closely followed by investors have also showed an increase.  It is seen that end of period stock estimations show a parallel trend when compared with each other. A MARKET IN PARALLEL WITH THE PRODUCTION ESTIMATIONS What price of the Chicago Commodities Exchange that is payable on March had a poor start with the New Year.  Increased production estimations continue to influence.  "Expectations for the year 2015 are getting more clear. The production will still be high. In addition, one of the top topics on the agenda of the year 2015 will be the changes in the exchange rates and decisions to be taken by FED. We will see the reflections on futures. Expectations indicate a downward trend for the prices in Turkey.  The fact that Turkey is given a place in the report of three organizations verifies the expectations.  Respectively, 520 and 480 cent/ bushel levels are prominent in the downward trend of the wheat prices payable on March. For the present, I do not expect upwards trend to exceed the 565-570 cent/bushel level." However, we will see a market in parallel with the production estimations.