Wheat Commentary
Sept Chgo wheat closes 4 ¾ cents lower ($5.06), Dec 4 ½ cents lower ($5.30 ¼) and March 4 ¼ cents lower ($5.50)
Sept KC Wheat closes 7 cents lower ($5.06 ½), Dec 7 ¼ cents lower ($5.32 ¾) and March 7 cents lower ($5.49)
Weekly Wheat Export Inspections – 578.6 K T. vs. 400-600 K T. expected
Spring Wheat Condition & Progress – 34% GE vs. 34% expected vs. 69% year ago – 91% headed vs. 87% 5-year average
Egypt announces an overnight tender for optional origin wheat
Despite the Mpls wheat market trying to rebound the Chgo and KC wheat markets remain mired in a liquidation mode. Unlike the rest of the Ag trade both the day’s highs and lows were made during the Sunday night session. The majority of the Chgo and KC trade were spent trading at lower prices for the day. It is quite clear that KC is liquidating vs. Chgo and both Chgo and KC are liquidating vs. Mpls. The trade is expecting to see further downgrades to the US spring crop. If true and we couple this with Egypt’s overnight tender announcement the downside should remain somewhat limited (near term) for the KC and Chgo markets.
The interior SRW cash wheat markets remain quiet with no changes being noted. The Gulf market is a shade easier. The KC cash markets are seeing a similar situation – interior bids are quiet while the Gulf is easier. Wheat spreads in Chgo ran softer on the day while KC spreads were mostly flat but staying wide.
New lows were seen in both KC and Chgo for the current correction phase. I do have to point out that were are now within shouting distance of the first decent looking support levels. I’ve been thinking that KC wheat should begin to realize support near the $5.00 level; we traded down to $5.03 today. I’ve also been thinking Chgo wheat should realize support near its $5.00 level; we traded down to $5.02 ¾ today. Given the continued downgrades to the spring crop, the overnight Egyptian wheat tender and the continued soft US dollar (make note – US origin is not competitive) I have to think we’re getting pretty close to establishing some interim lows. I see no need to be short as we approach my suspected support levels. Any overnight easiness in the price action, I think, should be fairly well received.
Daily Support & Resistance for 07/18
Sept Chgo Wheat: $4.99 – $5.20
Sept KC Wheat: $5.00 – $5.25
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