“When the projection averages of the two institutions making global projections on the grain markets are taken into consideration, world wheat production is expected to be 706,2 million tons. This amount points 4 million tons of increase compared to the previous month. It is higher in each month compared to the previous months.” Sales pressure on the wheat transactions kept its presence during July. The sales pressure started following the announcement of the production projections for the new season still continues. The newly announced production projections were one of factors in the increase of the sales. Each new projection was worse than the one in the previous month. There wasn’t any upward response possibility. There are still high production and stock concerns. Naturally, these concerns were reflected on the projection reports. Besides, we also saw downward revises on the price projections of many institutions. Shortly, strong supply side in the wheat market causes the price trend to be downward. As we stated often before, June was shown as a critical month during which price trend is determined in the futures. We have witnessed that it has reoccurred in 2014. Consecutive declines are coming in the following process. TWO POINTS THAT SHOULD BE TAKEN INTO CONSIDERATION BY THE INVESTORS Another point to be considered can be shown as the positive trend in the developed economies. As a result of the monetary expansion policies of the central banks, many commodities entered into an upward trend. Last year, the performance of the commodities declined with the news that U.S. Central Bank (FED) would decrease the monetary expansion. What happened during the increase has reversed now. As positive signals are gotten from economic data and due to the news that monetary expansion would decrease cause sales pressure on the commodities. It is inevitable to experience shrinking in the commodity market with the decrease of the liquidity. Although the trend of risk aversion causes the commodities to be seen as reserve, it causes increase in the sales pressure during the decreasing liquidity. At this point, changes in the overall picture should be evaluated with economic data and long term trends while making transactions in the commodity markets. It would be beneficial for the investors to pay attention to these two points on behalf of hedging. THE STRUCTURE CHANGES AT THE FINANCIAL MARKETS Before the global crisis, a rapid increase was seen in the asset prices. It was impossible to explain this increase with core values. The increase was not product-based; there was increase in all asset prices. We saw similar price anomalies in the structural changes in the financial markets like the termination of the Bretton Woods system. Based on this, we can say that financial structure in the markets has changed. Now, the concepts of risk and risk aversion are being changed. We see the most perfect embodiment of this in the commodity market. Now, many countries see the commodities as a reserve. Due to that wheat is one of the primary food sources and accepted as a liquid product draw the attention of the investors. At this point, new reserve bonus should be added into the basic dynamics despite that the prices are decreased. This shows that balance prices changed before the crisis. WHEAT PRICES IN TURKEY IS INCREASING In Turkey, wheat harvest has begun. It is estimated that production loss due to the drought would exceed 20%. However, it should be stated that this loss has remained as local. Especially the loss amount in Central Anatolia and Eastern Anatolia regions is expected to be much higher. Due to this loss in the production, it is seen that the local wheat prices have not lost value despite the global markets. It is stated that there is no need for intervention purchase prices this year due to the high prices. It is estimated that wheat supply would be limited through the year due to the drought and low production. This means higher wheat prices. However, there is also precautionary measure wheat import. Wheat import average of Turkey in the last five years is at 3,7 million tons level. The import amount is expected to be much higher this year. THERE IS PRODUCTION INCREASE IN THE USDA AND FAO PROJECTIONS According to the projection report released by U.S. Department of Agriculture; production amount increased 3,55 million tons compared to the previous month. Thus, production amount has reached to 705,17 million tons. It points 9,03 million-ton decrease compared to the previous year. It is worth recalling that last year was the record production year despite this increase. Shortly, there is still high wheat production. Newly gotten data causes further deterioration of expectations. Higher increase compared to the previous month causes the data to be treated with suspicion. However, the production news especially from Russia and Ukraine point that this could be true. Even though it is considered that delivery and finance issue would be experienced due to the tension between Russia and Ukraine, projections show that production would be high. Exportation of this product would be inevitable. We have already noted down that Egypt’s recent wheat purchases were made from Russia and Ukraine. Wheat production in Russia is projected to be approximately 56 million tons. This means almost 20 million tons of increase compared to 2012. As the supply is high, it is forecast that wheat export from Russia would increase. In this case, the expectation of increase in the wheat supply in the global markets has increased. The United Nations Food and Agriculture Organization (FAO) increased its world wheat production projection 4,5 million tons compared to the previous month. The negative effect of this amount of increase on the wheat market should be reacted normally. Thus, global wheat production will reach to 707,2 million tons. Production amount decreases 1,4% compared to the last year. In other words, last year’s production amount is almost reached. Despite the losses due to the drought in some countries like Turkey, having reached to this amount is perceived as a negative signal by the investors. The production is 9,7 million tons lower than the last year. Besides, there is a decrease in the end period stocks. The effect of the increase in the demand is felt. We saw that the demand especially from Northern Africa increased again in July. As a result; when the projection averages of the two institutions making global projections on the grain markets are taken into consideration, world wheat production is expected to be 706,2 million tons. This amount points 4 million tons of increase compared to the previous month. It is higher in each month compared to the previous months. It can be said that new production projections are not good for the wheat market. RESPONSE PURCHASES MAY CHANGE THE TREND It is seen that December futures wheat price starts recovery efforts after the sharp decline beginning in May at the Chicago Mercantile Exchange. Thus, it is projected that upward trend can be seen within the response purchases of August. The purchases especially from 547 cent/bushel level provided the sales to be met. It is seen that this point is trying to be kept as short term support. If exceed of this level is maintained, it is estimated that an increasing trend to 580 and then 600 cent/bushel level can be seen. I stated before that increases would be remained as response in June. Investors will again follow the projection reports closely. There can be increases especially in the production of Black Sea region. Thus, there may be increase in the production projections. However, I guess this increase will be met by the demand news. Therefore, I maintain my expectation of horizontal and response purchases for wheat price in August. Also, unexpected developments in the weather conditions can be used as a reason for the response purchases. If the 547 cent/bushel level decreases, we can see that the sales are re-accelerated. The general trend and the projection reports in the market point high production and sales pressure. However getting the new projection reports as positive may cause increase in the response purchases.