Wheat Commentary
March Chgo Wheat closes 3 cents higher ($4.25 ¾), July 3 ¼ cents higher ($4.52) and Dec 4 cents higher ($4.86 ¾)
March KC Wheat closes 1 cent higher ($4.28 ½), July 1 ½ cents higher ($4.59 ½) and Dec 1 ½ cents higher ($4.96 ¾)
Weekly Wheat Export Inspections – 337.9 K T. vs. 250-400 K T. expected
Speculative short covering is spurred on by the ongoing dryness in the central southern US Plains. Weekly export inspections were deemed no big deal despite being mid-range of expectations. I do find it interesting that the Chgo market leads the way with the short covering when it’s the KC market/crop that is the in the forefront of the “dry” conversation. I have to think it comes down to the higher than expected HRW acres the USDA reported on January 12th. The other side of that coin is that it is the Chgo market that has the greatest concentration of spec shorts. With Chgo gaining on KC I have to think this market is going nowhere fast as I believe if wheat is in the process of making a notable low KC should lead just as it was before the USDA shocked the trade with a near unchanged winter wheat seeding number.
Interior cash wheat markets remain extremely quiet. There is no selling interest out there just like there is very little buying interest out there. Gulf markets for both varieties have been running unchanged for the past number of days. Chgo spreads have been a modest sideways dating back to last September. KC spreads aren’t much different.
Flat price wheat got crushed from the USDA on January 12th. Flat price has been trying to “flag” back up since two days after that report. Prior to the Jan 12th USDA wheat implied volatility had been running around 19%. Since that report implied volatility has slumped down to 14%-15%. That suggests the uncertainty has gone away. Without uncertainty right now where can the market go – looks like nowhere to me.
Daily Support & Resistance for 01/23
March Chgo Wheat: $4.20 – $4.30
March KC Wheat: $4.24 – $4.34
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