Wheat Commentary
July Chgo wheat closes 2 ¾ cents higher ($4.27), Sept 2 cents higher ($4.40 ¼) and Dec 2 ¼ cents higher ($4.61 ¾)
July KC Wheat closes 2 cents higher ($4.26 ½), Sept 2 cents higher ($4.43 ¾) and Dec 2 ½ cents higher ($4.68 ¾)
On 5/16 Egypt announced an overnight optional origin tender – Egypt buys 295 K T. wheat – 60 K T. Romanian, 60 K T. Russian, 60 K T. Ukrainian and 115 K T. US
Weekly Wheat Export Sales – old crop vs. 0-200 K T. expected; new crop vs. 200-400 K T. expected
After challenging recent contract lows the wheat market finally sees a bounce higher. Weather considerations in the HRW areas (the idea of too much moisture is in the forecast), the continuing lower US Dollar and the US finally participating in an Egyptian tender were the supporting issues. Speculator short covering was deemed as the best buying. Despite being higher it wasn’t the best close as prices sold off noticeably late in the day. My thought on this is the short speculator is not willing to give up on this position unless losses are being experienced.
Interior cash wheat prices remain quiet. Other than the overnight Egyptian tender not much is happening with export prices. Wheat spreads ran slightly firmer in Chgo due to the spec short covering while KC spreads ran mostly flat.
The flat price bounces a bit after looking at recent contract lows but closing prices weren’t really indicative of the near term trend turning back higher. I couldn’t help but notice the rally we saw on Wednesday balked at first level minor resistance. All the Chgo market did was fill the gap from last Friday to Monday’s high. KC prices fell short of its respective Friday to Monday gap. My short term bias is to see no worse than a consolidating type trade against recent lows while longer term ideas is to see the market rally out of the hole. What will prompt the latter remains to be seen but the spec is short enough to provide the fireworks if a rally ever gets going.
Daily Support & Resistance for 05/18
July Chgo Wheat: $4.23 – $4.32 ($4.36)
July KC Wheat: $4.23 ($4.20) – $4.35
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.