Wheat Commentary
March Chgo Wheat closes 4 ½ cents higher ($4.38 ¼), May 5 cents higher ($4.58 ½) and July 4 ¾ cents higher ($4.73)
March KC Wheat closes 2 ¼ cents higher ($4.64 ¼), May 2 ¼ cents higher ($4.74) and July 2 ½ cents higher ($4.85 ¾)
Weekly Wheat Export Inspections – 535.9 K T. vs. 375-575 K T. expected
Flat price wheat tried to be the bright spot of the AG complex on Monday but when comparing the close to the highs of the day it wasn’t too bright. Ongoing dryness in central southern Plains, especially the western reaches of that area are creating the most concerns. I saw some pretty low temps in selected areas over the weekend but no one was talking about that, just the dryness. There is some moisture being forecasted for the eastern edges of the central southern Plains later this week. Given the idea of noticeably low acres for US winter wheat and the recent rise in prices Mpls wheat has started to move lower from the idea of improved spring wheat plantings (weather permitting). Offsetting issues are a bigger EU wheat crop and Russian crop. ABARE, the Australian version of our USDA came out over the weekend suggesting the Australian wheat crop for the coming season will be down 8.0 M T. vs. what they had this past season touting a long term dry forecast. I’m not sure how they can tout this as early as they are as Australian planting doesn’t start for at least another month. On Thursday the USDA will update US and World supply-Demand. The US carryout average trade guess is 1.135 billion bu. (-4 million) and the World carryout is thought to be 248.62 M T. (+10 K T.).
Most interior cash markets see little change vs. last week. The export market for SRW remains quiet while the HRW export market at the gulf is firm. Chgo spreads stay wide while KC spreads are boringly flat.
Spec short covering remains the Chgo market’s best friend while the KC market is seeing specs add to their already net long positions. Price charts suggest the Chgo wheat market remains in a well-defined upwards channel that has been working since the 1st of the year. The same holds true for the KC market. We have to remember that any further upside impetus will have to come from weather considerations as current wheat stocks to fall back on remain more than ample.
Daily Support & Resistance for 03/07
July Chgo Wheat: $4.66 – $4.80
July KC Wheat: $4.80 – $4.90 ($4.95)
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.