Wheat Commentary
May Chgo Wheat closes 11 ¼ cents higher ($4.57 ½), July 10 ½ cents higher ($4.74) and Dec 10 ½ cents higher ($5.12 ½)
May KC Wheat closes 17 ¼ cents higher ($4.84 ¾), July 16 ½ cents higher ($5.03 ¼) and Dec 14 ¾ cents higher ($5.45 ½)
Just because I was not surprised at the low winter wheat ratings doesn’t mean the rest of the trade wasn’t. I felt the low ratings had been advertised due to recent weather in the western reaches of the central southern Plains. Well the trade took notice of those ratings, applied the latest dry forecasts, and came after the KC market with almost reckless abandon. KC prices gapped higher Monday night and really never looked back until the closing minutes of the day session when profit taking stepped in and trimmed some of the midday gains. At one point in the morning July KC prices were up 24 cents. Chgo’s best during the day was up 16 ¾ cents. I understand the probability of a short winter crop but I also understand the competition’s winter crop is in much better shape and they have been garnering the majority of the export market. Bottomline – a short crop without demand is not that short.
Toledo continues to reach for SRW. The Ohio River improves by a touch. Elsewhere not much is happening. May Chgo wheat gains on July but after July spreads are pretty flat. The buying in KC has to be viewed as new longs as bull spreads work all the way out to March 2019. It will be interesting to see how the wheat spreads react when the index fund roll starts at the end of the week.
The price action on the charts looks great as today’s closes are on top of some decent looking basing action. If prices are meant to move higher KC will continue to lead. It’s the KC market that’s attracting new longs while Chgo is still short covering.
Daily Support & Resistance for 04/04
July Chgo Wheat: $4.66 – $4.80 ($4.84)
July KC Wheat: $4.93 – $5.12 ($5.15)
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