Wheat Commentary
May Chgo Wheat closes 14 ¾ cents higher ($5.40 ½), July 11 ¼ cents higher ($5.38) and Dec 10 cents higher ($5.72 ¾)
May KC Wheat closes 11 ¾ cents higher ($5.47 ½), July 12½ cents higher ($5.67 ¾) and Dec 13 cents higher ($6.08 ½)
Weekly Wheat Export Sales – 234.8 K T. old crop vs. 0-300 K T. expected – 210.3 K T. new crop vs. 100-300 K T. expected
Wheat Quality Council Kansas Tour Results – Yield 37.0 bpa vs. 40.98 bpa 5-year average – Kansas Production – 243.3 million bu. vs. 333.6 million bu. USDA 2017
Welcome to the wonderful world of volatility!!! After Wednesday’s trade many wheat traders were thinking correction. That correction lasted Wednesday night as Thursday morning brought us a resumption of higher prices. The Wheat Quality Council says Kansas has a crop that is 90 million bu. less than what the USDA pegged them for last year. Continued rhetoric around dryness is Europe, Ukraine and Russia continues to throw fuel on the fire when it looks like it is about ready to peter out. New spec longs takes the KC market higher while short covering in Chgo takes that market higher. I don’t think the spec is out of all of his Chgo shorts but he should be getting close. What happens when they start to get long?
Interior cash wheat markets remain relatively quiet. This holds true for the export markets as well. Remember – the current rally has not been about demand but rather short supply. Chgo spreads continue to show a bullish bias led by the “in delivery” May contract; still no deliveries against this contract. KC spreads continue to creep higher. The July/Dec KC spread has improved by about 8 cents or so dating back to mid-April. As long as the US crop and our competitors’ crops remain in question I’m thinking bull spreads will continue to work.
In Chgo the current rally started on April 24th – since then the market has moved about 70 cents (low to recent high). Attempts to correct have yet to last more than a day. That tells me to get out of the way when thoughts of being a hero arise (fading the rally). I could be wrong but it wouldn’t surprise me to see the wheat market stay relatively firm until we see what the USDA has to say about the new crop on the 10th; not only here but in the World as well. Remember – the USDA announced they are going to give us two sets of global carryout; one with China, one without China. On the surface the differences will be dramatic looking.
Daily Support & Resistance for 05/02
July Chgo Wheat: $5.22 – $5.53
July KC Wheat: $5.50 – $5.81
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