Wheat Commentary
Dec Chgo Wheat closes 4 ¼ cents lower ($4.06), March 2 ½ cents lower ($4.32 ¾) and July 2½ cents lower ($4.58 ¼)
Dec KC Wheat closes 5 ¾ cents lower ($4.14 ¼), March 2½ cents lower ($4.31 ½) and July 3 cents lower ($4.60 ¾)
On Tuesday US wheat futures resumed being the favorite short within the grain complex. This held true not only for the flat price but as well for inter-market spreads. The lack of export continues to be the stumbling block here. Sure Gulf prices read high but that’s due to a lack of movement as elevators would rather collect storage income vs. moving the wheat. A sloppy looking technical picture added to the day’s weak performance. So far the developing drought conditions in the Southern US Plains are failing to attract any attention.
Not much change is being noted within the interior cash wheat markets. Basis levels can be called steady to better. Locations closest the Gulf appear to show the best basis levels but that is in part to lower transportation costs. The Gulf for HRW continues to strengthen while SRW at the Gulf appears dead in the water. Chgo spreads, March forward, ran steady to fractionally easier while KC March forward spreads ran steady to fractionally better.
Prior to Tuesday the price action in the flat price wheat charts were beginning to show an upflagging formation. After Tuesday’s action those perceived upflags are breaking down. Despite the ugly looking flat price action the support that was established after last week’s upside reversals continues to hold. For those of you that are trying to be friendly you probably don’t want to see March Chgo wheat below $4.30 to $4.28 and March KC below $4.28 to $4.26.
Daily Support & Resistance for 12/06
March Chgo Wheat: $4.28 – $4.40
March KC Wheat: $4.28 – $4.40
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.