March Chgo Wheat closes 6½ cents lower ($4.14), May 6 ¼ cents lower ($4.28 ¼) and July 6 ¾ cents lower ($4.42 ½)
March KC Wheat closes 8 ½ cents lower ($4.25 ¾), May 8 ¼ cents lower ($4.38 ¼) and July 8 ¼ cents lower ($4.50 ¼)
Weekly Wheat Export Inspections – 321.4 K T. vs. 200-400 KK T. expected
Flat price wheat continues to retrace the rally that started in late December. Slow business (demand), a relatively strong US Dollar and the idea the winter crop in the US as well as elsewhere is okay shape removes the incentive for ownership. Some may argue that with the lower than expected acreage (reported earlier this month) is a basis for long term ownership – that may be true but long term is a long way off. As of this writing the rationale for immediate ownership is not here. Wheat charts, like corn charts, advertise trading range affairs of which are currently right in the middle of.
The interior wheat basis remains quiet. Export basis, however, continues to show a firm tone. If one looks at recent shipments one would surmise that business is nothing special. What’s making the export basis rise is the slow movement from both producers and elevators. If one is holding wheat and has the carry locked in no one wants to lose that. With that said – where there is need for product they are going to have pay that much more to secure it. So far the strong export basis has done little to impact the spreads in either Chgo or KC.
I still believe the wheat market is in the process of making long term lows as I believe the lower than expected acreage opens the door for weather worries later this spring. The problem right now is that we don’t have any weather worries. In the meantime the market will continue to act as a trading range affair – looking good and not following through and looking bad and not following through (we’re looking pretty bad right now).
Daily Support & Resistance for 01/31
March Chgo Wheat: $4.10 – $4.20
March KC Wheat: $4.21 – $4.34
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.