Wheat Commentary
July Chgo wheat closes 6 ¼ cents higher ($4.35 ¾), Sept 6 ½ cents higher ($4.50 ¼) and Dec 7 ¼ cents higher ($4.71)
July KC Wheat closes 8 cents higher ($4.38), Sept 8 cents higher ($4.55 ¾) and Dec 7 ¾ cents higher ($4.81)
Monday afternoon’s spring wheat condition report gave us a notable slide in conditions. Current spring wheat conditions are the worst we have seen for this time frame dating back 6 years. This in turn had the Mpls market surging higher as new longs took prices above the $6.00 mark. We also saw new longs come into the KC market as the winter wheat ratings there too slid. All of the new buying in the “hard” markets spilled in the Chgo market where short covering took over. The trade has been long Mpls and KC while being a sizeable short in Chgo. Whether we see new buying and/or short covering (depending which market you’re in) will be dictated by weather considerations.
Most interior cash markets if not steady are better. Wheat producers remain reluctant sellers despite the recent rally. Gulf values for SRW are fully steady while HRW values continue to firm. Despite the flat price rally spreads in Chgo were soft. KC spreads ran fractionally better. The softness in the Chgo spreads, I think, is due to the “big boy” index fund roll starting tomorrow.
Going forward all eyes will be on the Mpls market as it is your upside leader. According to the NWS there is rain in the 6-10 day forecast for that area. Whether it comes to fruition remains to be seen. Despite the rally that started last week both the KC and Chgo markets remain range bound. With a little bit of imagination the price action may be hinting at an interim breakout but so far confirmation remains lacking. Its harvest time for HRW – with that said buying rallies is not recommended but I will still advocate buying breaks to what I feel is support.
Daily Support & Resistance for 06/07
July Chgo Wheat: $4.30 – $4.42
July KC Wheat: $4.31 – $4.44
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