Wheat Commentary
May Chgo Wheat closes 17 ¼ cents higher ($5.29 ¾), July 18 ¾ cents higher ($5.29 ¼) and Dec 16 ¾ cents higher ($5.64)
May KC Wheat closes 13 ¾ cents higher ($5.32 ¼), July 15 ½ cents higher ($5.53) and Dec 14 ¾ cents higher ($5.93 ½)
Spec shorts in Chgo continue to fall all over themselves to get out. The specs in KC continue to get longer. I’ve yet to hear of any findings from the Wheat Quality Council tour as they are currently moving through the state of Kansas. Ideas are they are going to find reduced yields from the winter drought as well as freeze damage from earlier in April. Adding to this are the developing dry conditions in Europe (east and west) as well as in areas around the Black Sea. The aforementioned areas were responsible for keeping world wheat prices at bay last year. If they have sustained problems this year world wheat prices will have to move higher and this will include the US.
Interior cash wheat prices are stable. I have to think not much cash wheat is moving as producers remain in a state of flux given that crop progress/development is noticeably behind. Gulf prices remain quiet as well. Bull spreads are working in both the Chgo and KC markets. I have to think a good portion of the bull spreading is due to the recent influx of spec buying as most funds/managed money trade upfront.
Weekly Chgo wheat charts have broken out to the upside. KC weekly charts are not quite there. Volatility has been increasing with the rally. That means be open to the idea of sharp corrections as well as sharp advances that will feature voids of buying once a correction ensues. Other than that all systems read “GO” here.
Daily Support & Resistance for 05/02
July Chgo Wheat: $5.15 – $5.32 ($5.42)
July KC Wheat: $5.40 – $5.65 (?)
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