Wheat Commentary
July Chgo wheat closes 11 cents higher ($4.45), Sept 10 ¾ cents higher ($4.59 ¼) and Dec 10 cents higher ($4.80 ¾)
July KC Wheat closes 14 ¼ cents higher ($4.57), Sept 13¾ cents higher ($4.74 ¼) and Dec 12 ¼ cents higher ($4.98 ¼)
Egypt, once again, announces an overnight tender for optional origin wheat – Overnight Egypt buys 300 K T. wheat (180 K T. Russian, 60 K T. Romanian, 60 K T. Ukraine).
Mpls wheat zooms higher once again fueled by Monday night’s spring wheat ratings. I thought I read somewhere those ratings were the lowest for the past 29 years for the current time frame. I thought it was interesting that Mpls could zoom higher despite what appeared to fairly sizable rains moving through N. Dakota and parts of S. Dakota overnight. Some will call that too little too late. With Mpls zooming higher KC follows but to a lesser extent while Chgo brings up the rear with the least amount of price increase on the day. Personally I don’t know if the overnight rain event was too little too late but I did take a few calls on Tuesday asking about the major rally that occurred in 2007-08. Back then world wheat stocks stood at 110.0 M T. vs. current World wheat stocks at 260.0 M T.
The wonderful world of cash wheat (SRW & HRW) remains quiet. The interior basis ran unchanged as did export values. Gulf bids for HRW continue to be strong. KC spreads appear they are finally starting move. Not much change is being seen in the July/Sept spread but the nearby contracts are becoming noticeable gainers vs. Dec forward contracts. In Chgo July and Sept register 1 cent gains vs. Dec forward contracts.
Mpls wheat flirts with overbought considerations and there is a gap to fill 20 cents below tonight’s closes. As much as I would like to trade the Mpls market it is just too illiquid/flaky for me. I can remember too many years where the Mpls market totally ignored what is considered standard technical considerations. KC has to trade along with Mpls as it is “hard” wheat as is the Mpls variety. Some will say KC trails due to the ongoing harvest in Kansas. I will admit I was a bit taken aback when the USDA inched higher the national winter yield on Friday but even more surprised when they left harvested acres unchanged. My bottomline – it appears the end-users of the “hard” varieties appear to be on the ropes while the weak of heart are trading/covering shorts in Chgo.
Daily Support & Resistance for 06/13
July Chgo Wheat: $4.34 – $4.50
July KC Wheat: $4.48 – $4.62
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.