Wheat Commentary
May Chgo wheat closes 9 ½ cents lower ($4.18), July 8 ¾ cents lower ($4.33 ½) and Dec 7 cents lower ($4.69 ¼)
May KC Wheat closes 5 ½ cents lower ($4.32 ½), July 5 ¾ cents lower ($4.44 ¼) and Dec 4 ¾ cents lower ($4.86)
Weekly Wheat Export Inspections – 615.0 K T. vs. 350-600 K T. expected
Winter Wheat Conditions – 53% GE (-1%) vs. 51% expected vs. 62% year ago – Headed – 50% vs. 46% 5-year average
Spring Wheat Planted – 54% vs. 45% expected vs. 60% 5-year average – Emerged – 21% vs. 29% 5-year average
Concerns over possible crop damage from one week were subsiding on Monday as trading funds returned adding new shorts to their already large net short position. I’m not sure I agree with this as I’m not sure if damage did occur can it be assessed this quickly. My thoughts are we need to get into harvest to find the really true results. With that said it is my belief, despite Monday’s ugly trade, suggested interim support levels will hold. As far as the USDA is concerned – I’m not sure they can fully assess the ramifications of last week’s weather. World numbers are expected to decline almost noticeably.
Most interior cash wheat markets are unchanged with what we saw last week; SRW basis has no changes, HRW in Kansas remains unchanged while HRW in Oklahoma is sustaining last week’s firming action. HRW at the Gulf continues to firm while SRW at the Gulf is holding onto last week’s minor bump higher. Chgo spreads are soft all the way out as are the KC spreads. This is a combination of fund selling upfront and the idea if wheat is going to get bullish it won’t happen overnight but much later when global supplies can be better assessed.
Both KC and Chgo wheat markets are on the verge of filling the inter-day gaps that were created from one week ago. It is my thought that we can fill the gaps but further downside will be limited until we see what the USDA has to say on Wednesday. Maybe I’m out in left field but longer term I feel the lows we made in late April will hold. I will admit we have a bit of a conundrum here – daily momentum indicators read south with lots of room to move lower while the shorter term inter-day indicators are starting to read almost low.
Daily Support & Resistance for 05/09
July Chgo Wheat: $4.28 – $4.40
July KC Wheat: $4.37 – $4.52
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