Wheat Commentary
Sept Chgo wheat closes 5 ¾ cents higher ($4.09) Dec 4 ½ cents higher ($4.34 ½) and March 4 ¼ cents higher ($4.57 ¼)
Sept KC Wheat closes 7¾ cents higher ($4.05 ½), Dec 7 ½ cents higher ($4.33 ¼) and March 7 ½ cents higher ($4.51 ¾)
Weekly Wheat Export Sales – 386.5 K T. old crop vs. 300-600 K T. expected – no new crop vs. none expected
Thursday was the second day in a row where I have seen short covering within the intra-day price action. Wednesday’s trade was not as clear as today’s was. So why the short covering – technical oversold indicators and probably more importantly the amount of puts that are in the money with Sept expiration due tomorrow. Coming into today, Thursday, I was told there are 10’s of thousands Sept puts in the money. Without a noticeable flat price rally these puts will become short futures already adding to wheat is perceived as an overly short market. Other news of note continues to talk about a yet larger Russian crop. Weekly export sales were deemed no big deal.
Not much change is being noted on the advertised interior wheat basis. Bids for higher protein continue to move higher. If protein is going to be that big of an issue it will be interesting to see how possible deliveries develop. Export values for HRW continue to be firm – not much happens with export values for SRW. Bull spreads were working in Chgo (short covering) while the spread activity in KC saw unchanged values.
It’s all about the potential for short covering and far it carries the flat price. For what it is worth the Dec Chgo market fell a fraction shy of registering a text book key reversal as we recorded an outside day involving new contract lows while the close only matched the previous day’s high. Dec KC did register a text book key reversal – an outside day with a new contract low (by a ¼ cent) and closing above the previous day’s high. For what it is worth Dec Mpls wheat shows a pseudo looking interim double bottom against the $6.50 level with an outside day closing above the previous day’s high. Making a long story short – technical considerations are trying to suggest we have gone low enough for now.
Daily Support & Resistance for 08/25
Dec Chgo Wheat: $4.29 – $4.40 ($4.45)
Dec KC Wheat: $4.29 – $4.40 ($4.46)
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