Wheat Commentary
March Chgo Wheat closes 10 ¼ cents higher ($5.02 ¼), July 8 ¾ cents higher ($5.23 ¼) and Dec 8 ¾ cents higher ($5.55 ¾)
March KC Wheat closes 11 ½ cents higher ($5.33 ½), July 11 cents higher ($5.61 ¼) and Dec 9 ½ cents higher ($5.94)
Weekly Wheat Export Inspections – 400.9 K T. vs. 200-400 K T. expected
Egypt announces an overnight tender for optional origin wheat – don’t expect the US to participate as the recent rally keeps US origin from being competitive
The story has not changed here – it’s all about the ongoing dryness (and forecasts for that to continue) in the central southern US Plains. The extreme cold that encompassed Eastern Europe last week is being discounted due to the existing snow cover in that area. I get the impression that the Chgo speculator is still a small short while the KC speculator is adding to his existing longs. Last week’s highs represent a significant looking resistance level for Chgo wheat. The KC market is still targeting a breakdown gap that occurred last July 21st to July 24th.
Not much happens within the US cash wheat markets – this holds true for the export markets as well. Bull spreads work in Chgo due to the lack of deliveries against the March contract (quality issues – if its good you don’t want to let go of it) as well as the continued spec short covering. KC spreads show some improvement as well and that’s in part to the speculative buying adding to existing longs.
As long as it stays dry and forecasts continue to suggest so the flat price here will be biased to move higher. I doubt the USDA will give us much to go on with their supply-demand updates. Trade guesses are expecting minimal if any changes vs. last month’s data. The bearish looking supply-demand data may keep advances in check between now and then but as long as the US HRW crop remains in question the bias should be for higher prices.
Daily Support & Resistance for 03/06
May Chgo Wheat: $4.95 – $5.20
May KC Wheat: $5.30 – $5.56
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