Wheat Commentary
March Chgo Wheat closes 8 cents higher ($4.57 ¼), July 9 cents higher ($4.83 ½) and Dec 8 ¾ cents higher ($5.15 ¾)
March KC Wheat closes 16 ¾ cents higher ($4.69 ¾), July 15 ¾ cents higher ($4.99 ¾) and Dec 12 ¾ cents higher ($5.32 ¾)
A dramatic downturn in the month-to-month HRW ratings in the central southern Plains has the KC market rocketing higher with Chgo trailing. Oklahoma is showing that 79% of its crop is now rated poor to very poor – in my eyes that says it all. The bottom line is that the shorts are on the run and it looks like they will continue to be on the run as long as the weather outlook for the central southern Plains remains tenuous. Adding to further support the US markets are Black Sea prices which have been rising. One may think daily prices are moving into an overbought scenario – they are not. It may difficult to believe but prices have only been rising for the past 5 days. It was just 6 days ago a test of contract lows was in the daily chatter.
Given the sharp rally of the past 5 days one would think interior wheat basis levels would be under pressure – they are not. Toledo increased their basis for SRW by 5 cents today. Export prices don’t do a whole lot – HRW reads a bit softer. Chgo spreads are softer up front mixed to better towards the rear. KC spreads ran better all the way out to the new crop. Is the situation in the central southern Plains dire enough for elevators/producers to begin hoarding their old crop?
As in corn all systems remain “GO” for wheat prices. Shorts are falling all over themselves to get out of KC and actually get long. Shorts have a long way to go before they get flat in Chgo. As long as the central and southern Plains continue to see dry forecasts technical correctional breaks in the price action should be well received. I’d like to add a bit of caution as to chasing the current rally – inter-day data reads a fair degree of overbought despite daily data not reading overbought. Watch your inter-day indicators for some easing prior to making any new purchases.
Daily Support & Resistance for 01/31
March Chgo Wheat: $4.48 – $4.70
March KC Wheat: $4.60 – ???
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