Wheat Commentary
July Chgo wheat closes unchanged ($4.29 ½), Sept unchanged ($4.43 ¾) and Dec 1 ¼ cents lower ($4.63 ¾)
July KC Wheat closes 3 ¼ cents lower ($4.30), Sept 3 ¾ cents lower ($4.47 ¾) and Dec 3 ½ cents lower ($4.73 ¼)
Weekly Wheat Export Inspections – 522.8 K T. vs. 425-625 K T. expected
Winter Wheat Crop Progress/Conditions – 10% harvested vs. 7% expected vs. 7% 5-year average – 49% GE (-1%) vs. 50% expected vs. 62% year ago
Spring Wheat Crop Progress/Conditions – 90% emerged vs. 85% 5-year average – 55% GE (-7%) vs. 61% expected vs. 79% year ago
It seems like the name of the game in the US wheat markets is to be long Mpls short Chgo and KC. The poor start to the spring wheat growing season is responsible. Harvest for the winter crop is in its early stages for HRW. The SRW harvest will not start until later this month. I find it interesting that the latest Bloomberg poll for total US wheat production is slightly higher vs. what the USDA printed one month ago. Current condition ratings coupled with the idea that a larger than normal number of acres has been grazed out does not support a higher production figure. This data is scheduled to be updated later this week, Friday the 9th.
Interior cash wheat markets continue to show a bias for higher basis levels. US wheat producers are not happy with their local prices so movement has been rather slow. Export prices have also been edging higher. So far very little of this has spilled over into the KC and Chgo spreads.
Chgo and KC continue to favor their recent downside while Mpls continues to scoot higher. Harvest is happening for HRW and that keeps the market on the defensive (even though nothing is getting sold). Between Mpls moving higher and KC staying somewhat depressed the Chgo market doesn’t know what to do. We still have in my opinion too many spec shorts in Chgo but what’s out there to rattle their cage? Overall I still think Chgo and KC will continue to honor recent lows but rally potential won’t come until we see a smaller crop size (maybe Friday?)
Daily Support & Resistance for 06/06
July Chgo Wheat: $4.22 – $4.36
July KC Wheat: $4.25 – $4.40
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.