Wheat Commentary
March Chgo Wheat closes 6 ½ cents lower ($4.40 ¼), July 6 ½ cents lower ($4.67) and Dec 6 ¼ cents lower ($5.00)
March KC Wheat closes 1 ½ cents lower ($4.61 ¾), July 3 ¼ cents lower ($4.91) and Dec 3 ¾ cents lower ($5.24 ¾)
Weekly Wheat Export Inspections – 428.5 K T. vs. 325-625 K T. expected
Like the rest of the Ag sector the spec in the Chgo wheat market wasn’t as short as some would have liked to believe. The CFTC suggested spec funds had covered 48.4 K shorts while most had figured they had covered 31.5 K shorts in the reporting time frame. Canadian wheat stocks come in slightly smaller vs. expectations which turn lent only minor support to the US hard varieties. US wheat export business appears meager at best. I get the impression we are having a hard time giving SRW away. Depending on which weather forecaster you want to listen to the central southern US Plains may see some moisture in the near term. The spec interest is clearly in favor of the KC market as KC extends its premium over Chgo. The Mpls market continues to grind lower in the old crop while new crop is sideways. The idea on Mpls (HRS) is that we could see an increase in acres if the KC (HRW) crop continues to come up short on moisture.
Not much happens with interior cash wheat. SRW for export remains quiet while HRW at the Gulf has given back a noticeable amount. Chgo wheat spreads chop around to the point its hard to define a clear cut direction. KC spreads had been pretty flat in recent days; they poked their noses up on Monday but still in a long term sideways mode. If you want to get friendly KC spreads the March/July needs to get about 27 ½ under to create some excitement.
The price action is suggesting its time to take a pause in the recent rally. The last few days of activity is favoring a downflagging formation vs. a clear cut top. I don’t see a dramatic downturn in KC until we see how the forecasted moisture pans out. Chgo should continue to be the weak sister vs. KC as long as the KC crop remains in question.
Daily Support & Resistance for 02/06
March Chgo Wheat: $4.35 – $4.48
March KC Wheat: $4.54 – $4.70
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