Wheat Commentary
Dec Chgo Wheat closes 8 cents higher ($4.26), March 8 ½ cents higher ($4.44 ½) and July 8 ¾ cents higher ($4.72)
Dec KC Wheat closes 10 cents higher ($4.25 ¾), March 10 cents higher ($4.43 ½) and July 9 ½ cents higher ($4.74 ½)
Weekly Wheat Export Sales – 347.8 K T. old crop vs. 250-450 K T. expected – no new crop vs. none expected
Short covering in Chgo gets us more short covering – it’s called the domino effect. The rally, however, was led by the KC contract as there is a story out there that Iraq bought 450.0
K T. of US wheat in a “direct deal”. I’m not sure if this is part of the Tuesday 100.0 K T. USDA announcement. We also have trade chatter that has turned its focus to less HRW acres for the coming year. The rumor mill is currently suggesting that HRW acres could be down as much as 10% vs. last year and last year’s acres were at multi decade lows. The bottom line is that the Chgo spec was grossly short and this business goes a long way in suggesting these guys had gotten ahead of themselves.
Interior cash wheat prices don’t show a lot of change but if there is change it’s to the better. Gulf prices for HRW continue to be firm. SRW prices for export remain quiet. Chgo spreads leaked a bit on Thursday but still in the same range they have been in for quite some time. KC spreads remain flat as a pancake.
Let’s talk about Chgo wheat open interest. On August 28th Dec wheat went from $4.62 to $4.16 just two days ago. Open interest increased by 147 K contracts. This does not suggest liquidation but rather new short selling. The spec funds can get away with for some of the time but not all of the time. Granted US wheat business is not very good but I learned a long time ago bear markets are sustained through liquidation, not new short selling. My Opinion; we’ve gone far enough for now with the new short selling.
Daily Support & Resistance for 11/03
Dec Chgo Wheat: $4.20 – $4.32
Dec KC Wheat: $4.20 – $4.33
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