May Chgo wheat closes 17 cents lower ($4.26), July 16 ¼ cents lower ($4.37 ¾) and Dec 15 cents lower ($4.73)
May KC Wheat closes 18 cents lower ($4.32 ½), July 18 ¾ cents lower ($4.44 ½) and Dec 17 ¼ cents lower ($4.85)
Weekly Wheat Export Sales – 258.4 K T. old crop vs. 0-150 K T. expected – 563.4 K T. new crop vs. 200-400 K T. expected
The Wheat Quality Council tour puts a number on the Kansas wheat yield; 46.1 bpa vs. 57.0 last year vs. 41.6 5-year average. This puts some certainty on the Kansas crop. When uncertainty meets some certainty, more times than not, the recent direction of a market will reverse. Please note the use of the word “some”. The tour left the door open for additional downward revisions as fields that were still under snow cover were not counted. One has to think there will be further losses as we move through the monthly USDA production updates. The first production estimate of the season is next Wednesday, May 10th. It will be interesting to see if and how they incorporate last week’s weather impact. Last Monday the USDA left winter wheat crop conditions unchanged – I have to think we will see reductions this coming Monday not only for the HRW states but the SRW states as well as a lot of the SRW area may be sitting in water. Offsetting some of this should be noticeable increases in the HRS planting rates.
Not much is happening with Kansas wheat bids. Oklahoma bids are slowly but surely improving. Not much happens with the SRW bids. The export market for HRW continues to be firm while SRW for export is just starting to poke its nose up. The July forward spreads for both Chgo and KC softened due to the renewed spec fund selling.
The price action of the last couple days would suggest the recent rally is over. I won’t argue that point. Longer term, however, I don’t think the potential for higher prices is over. With the increase in volatility we need to get used to seeing the sharp moves such as we’ve seen this week. For the near term I’m thinking the mid-low $4.30’s (July Chgo) should act as support for the current sell-off. $4.35 to $4.30 should provide the same type of support for the July KC.
Daily Support & Resistance for 05/05
July Chgo Wheat: $4.32 – $4.49
July KC Wheat: $4.37 – $4.57
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.