Wheat Commentary
May Chgo wheat closes 4 ½ cents higher ($4.33 ¼), July 5 ¾ cents higher ($4.47 ½) and Dec 6 ¼ cents higher ($4.81)
May KC Wheat closes 4 ¼ cents higher ($4.29 ¾), July 3 ¾ cents higher ($4.42) and Dec 4 ¼ cents higher ($4.82)
Highlights of the USDA Supply-Demand report – US – increased carryout by 30 million bu. due to lowering imports by 5 million bu. and lowering feed & residual by 35 million bu. – World – increased carryout by 2.32 M T.
Despite receiving bearish looking data (both US & World) from the USDA with their supply-demand updates flat price fails to follow through to the downside. With that said the spec sector (net short) started covering their shorts. That’s what happens when a market fails to respond to bearishly construed data especially when the spec sector is already a decent sized net short.
Interior cash wheat markets remain relatively slow but if one looks between the lines the bias is slightly higher; both for SRW and HRW. The export market for SRW remains quiet. Spreads were soft once again in Chgo reflecting the ongoing index fund roll as well as traders’ interest moving to the new crop. The export market for HRW continues its week long firming action. KC spreads ran mixed on the day while maintaining an upwards bias that started just the other day.
Technical trading rules here on Tuesday. We received what appeared to bearish looking data from the USDA but the flat price could not stay down. That my friend is called “sell the rumor – buy the fact” type trading. Like corn (the other feed grain) the wheat market continues to be a broad trading range affair while the short term bias is for higher prices. As of this writing the winter wheat crop does not appear to be threatened while the spring wheat crop may have problems getting planted in a timely manner given current forecasts. With acres already at decades’ lows a bit of weather premium within the price structure is not unreasonable at this time.
Daily Support & Resistance for 04/12
July Chgo Wheat: $4.42 – $4.54
July KC Wheat: $4.38 – $4.48
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.