Wheat Commentary
Dec Chgo Wheat closes 2 cents lower ($4.33 ¼), March 3 cents lower ($4.52 ¼) and July 4 ¼ cents lower ($4.78 ½)
Dec KC Wheat closes 3 cents lower ($4.28 ¼), March 2 ¾ cents lower ($4.46 ½) and July 2 ¾ cents lower ($4.79)
USDA announces 104.2 K T. HRW sold to Mexico
Flat price wheat challenges interim lows made on Sept 12th and tries to bounce. The bounce really didn’t go anywhere (unchanged at best) as we still finished registering new low closes for the sell-off that started two weeks ago. US wheat remains saddled with the problem of slack demand. This is not only true of the export market but also with the domestic market. Like the corn market the trading funds are keeping their foot on this market’s neck. The bottom line is that the World is showing more than ample wheat supplies and the US is playing second fiddle in the export market.
The cash wheat market remains quiet whether it’s for domestic use or for export. Spreads in Chgo firmed from their recent easing but not to the point that grabs anyone’s attention. KC spreads remain wide as they hover just above contract lows.
The price action for US wheat is not too dissimilar to what we are seeing in the corn market as we are within shouting distance of contract lows. Spec funds are more than a healthy short. I see outright shorts here as well as inter-market spread shorts. I learned a long time ago that markets will go lower than what we feel reasonable and we may be looking at one of those situations right now. Technically I think the US wheat market is a bit to short but to date we don’t have anything out there to prove the funds wrong. I’m not sure the USDA will have anything to say to offset this scenario. From a technical standpoint I will be tempted to fade a move into new low ground as it will represent an exhaustion low. Until then ……
Daily Support & Resistance for 10/12
Dec Chgo Wheat: $4.22 (?) – $4.54
Dec KC Wheat: $4.20 (?) – $4.50
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