Wheat Commentary
May Chgo Wheat closes 4 ¾ cents lower ($4.87 ¼), July 4 ¼ cents lower ($5.04 ¼) and Dec 2¾ cents lower ($5.45 ¾)
May KC Wheat closes 5 cents lower ($5.16 ¾), July 4 ¾ cents lower ($5.35 ¾) and Dec 3 ¾ cents lower ($5.79 ¼)
Weekly Wheat Export Sales – old crop vs. 150-350 K T. expected – new crop vs. 100-300 K T. expected
Recent forecasts suggest the possibility of better rainfall last half April for the southwestern US Plains (KC wheat). Spring wheat areas are forecasted to stay cold and wet (Mpls wheat). Where is Chgo in all of this? It’s caught in the middle. For what it is worth Chgo will tend trade with KC. The trade is trying to figure out where we go from here given plentiful old crop supplies vs. a possible short new crop vs. the competition’s crops being in great shape. Remember – a short crop without demand is not all that short.
Interior cash wheat markets remain quiet. Export markets for US wheat remain quiet as well. Bear spreads work in Chgo in part to today’s flat price selling as well as the ongoing index fund roll. KC spreads are pretty much the same story. Overall wheat spreads in both Chgo and KC continue to show a bearish bias due to plentiful old crop supply, export business being slight and the possibility of a short new crop.
Does today’s inside day of yesterday (which involved new highs for the current rally) suggest the flat price is ready to do some correcting to the downside? Right now I’m thinking we may linger in this general area for another day or so. The spec trade in KC is long and threats of beneficial moisture in the dry areas of the HRW areas must be monitored. The spec trade in Chgo is still short so they will continue to take their cue from the price action in KC. For what it is worth the price action in Chgo has gone into a consolidation mode while KC is looking like a downflag.
Daily Support & Resistance for 04/12
July Chgo Wheat: $4.95 ($4.89) – $5.10
July KC Wheat: $5.25 – $5.44
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.