Wheat Commentary
July Chgo wheat closes 13 cents lower ($5.22 ½), Sept 16 cents lower ($5.37) and Dec 16 cents lower ($5.60 ½)
July KC Wheat closes 13 cents lower ($5.28), Sept 13 ½ cents lower ($5.44) and Dec 13 ¼ cents lower ($5.70 ½)
Total wheat production, most varieties; come in a bit higher than expected. New crop US carryout comes in noticeably higher than expected. The old crop World carryout comes in higher vs. trade ideas of lower. The new crop World carryout did see a slight decline vs. last month but still higher by 3.0 M T. vs. trade ideas. The initial reaction was sharp sell-off followed by an attempt to rally that for the most part failed. Discussion after the report was centered around how most believe the spring wheat production data will see decreases. I also found it interesting that the USDA left Canadian wheat production unchanged – I’m thinking we should see further decreases there as well.
Interior cash wheat prices continue to see little if any changes. This holds true for export prices as well. Spreads in all of the varieties, Chgo, KC and Mpls, lost ground with Wednesday’s sell-off. This is viewed as spec liquidation of recent longs.
The Chgo and KC wheat markets are showing a 6-7 day island. I have to think sell stops are accumulating just below the lows of these formations. Daily technical indicators are suggesting the recent rally is losing some of its vigor. Given the sharp advance 7-10 days ago I think it is not out of the realm to see some further profit taking if not some further consolidation.
Daily Support & Resistance for 07/13
Sept Chgo Wheat: $5.25 – $5.54
Sept KC Wheat: $5.30 – $5.56
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