Wheat Commentary
Sept Chgo wheat closes ¾ cent higher ($4.03 ½), Dec unchanged ($4.29 ¾) and March ¾ cent lower ($4.52 ¾)
Sept KC Wheat closes 3 cents higher ($4.00 ¼), Dec 3 cents higher ($4.29 ¼) and March 3 cents higher ($4.47 ½)
Weekly Wheat Export Sales – old crop vs. 300-600 K T. expected – new crop vs. none expected
On Tuesday flat price wheat, both KC and Chgo, registered technical buy signals. I did not see any direct fundamental rationale to create the signal. Yes, technically the market had been oversold but it has been oversold for some time. I looked at the prices of the Egyptian tender and from a FOB point of view the US is competitive but when freight is added in not so much. Today’s trade saw some minor retracement of Tuesday buy signal but was unable to stay down. KC is trying to establish a leadership role as it is challenging even money with Chgo after trading at a near 5 cent discount earlier today and yesterday. I could be wrong but I think it’s all about the delivery potential; in this case lack thereof. There has been a lot going on with the demand for better protein. It is my idea that is the protein scenario that will limit KC and Mpls deliveries. Chgo I’m not sure about but delivery registrations have been coming down. Going forward if we do have a lack of deliveries it could get the US wheat markets of off the ground. It’s all about Protein!!!
Advertised cash markets continue to be relatively quiet. Exports out of the Texas Gulf will continue to be slow as railroads down to there talk about flooded track lines. Spreads continue to be relatively wide. How deliveries pan out can change that. I question how much wider spreads can get over the near term.
Mid-late last week we saw suggestive buy signals. They lasted about 1 ½ days. Tuesday of this week we saw any suggestive buy signal. Will this one last longer? Month end is tomorrow and the spec trade is a big short – additional short covering, I think, can be expected.
Daily Support & Resistance for 08/31
Dec Chgo Wheat: $4.25 – $4.38
Dec KC Wheat: ??? – $4.36
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