Wheat Commentary
Sept Chgo wheat closes 10 cents higher ($4.30 ½), Dec 4 ¼ cents higher ($4.43) and March 3¼ cents higher ($4.63 ¼)
Sept KC Wheat closes 7 cents higher ($4.19 ½), Dec 6 ¼ cents higher ($4.45) and March 6 ¼ cents higher ($4.62 ½)
Weekly Wheat Export Inspections – 252.4 K T. vs. 500-600 K T. expected
Weekly Spring Wheat Crop Progress – 89% harvested vs. 88% expected vs. 78% 5-year average
Speculative short covering gave us decent gains in the Chgo and KC wheat markets on Tuesday. Gains could have been greater if Mpls wasn’t still liquidating. Some will cite a weaker US Dollar as part of the excuse for the rally but it should be pointed out that the US dollar was weaker than currently and the US wheat markets (KC & Chgo) were still making new lows. It does appear that the Black Sea market has stopped going lower for now which is indirectly supportive as recent lower Russian prices had been an impetus for spec selling.
Advertised interior cash wheat prices don’t do a whole lot. Bids for HRW at the Texas gulf continue to be strong as rail shipments to that locale are still have problems from Hurricane Harvey. I don’t see a lot of interest for SRW at the Gulf. Spreads in Chgo, Dec forward, are showing strength but I have to believe a lot of that is from the flat price short covering. Spreads in KC appear to be improving but one has to look very close to see the improvements.
Last week’s suggestive reversals remain intact. We have yet to challenge any market making resistance – that’s how far the market was oversold. Dec Chgo wheat should start realizing resistance as we near the $4.55-$4.60 level. Dec KC should realize some resistance at similar levels. I would like to believe that 10-15 cent corrections should be viewed as buying opportunities.
Daily Support & Resistance for 09/06
Dec Chgo Wheat: $4.35 – $4.54
Dec KC Wheat: $4.36 – $4.55
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