Wheat Commentary

storck

Just My Opinion – Wheat

Wheat Commentary

Sept Chgo wheat closes 7 ¼ cents higher ($4.19 ½), Dec 7 ¼ cents higher ($4.42) and March 6 ¾ cents higher ($4.62)

Sept KC Wheat closes 6 ¾ cents higher ($4.16), Dec 7 cents higher ($4.41 ¾) and March 7 cents higher ($4.59 ¼)

Highlights of USDA Wheat Supply-Demand report – US Old Crop – Left all data unchanged – World – Lowered carryout by 1.55 M T.

The USDA won’t update US wheat production until the end of this month. Since all of the domestic demand data was left unchanged the trade looked to the World data. Despite a noticeable increase in Russian production, +3.5 M T., it was more than offset by production reductions elsewhere, slightly better demand and a lower carryin. This gave us the only friendly number out there; the World carryout came down by 1.55 M T. This prompted flat price short covering as well as inter-market spread buying when the flat price tried to break with the rest of the Ag sector. The bottom line is that the wheat futures held suspected support and gave us a nice looking interim reversal to the upside.

Not much happens with the interior basis for SRW – the same holds true for SRW export. Chgo spreads improved on the day but as of this writing I’m thinking most of that improvement came from the flat price short covering. The interior HRW basis has a bias to improve especially in the southern Plains as millers continue to look for good protein. The Gulf, too, remains firm for the very same reasons. KC spreads improved with the flat price short covering.

After challenging suspected support levels flat price wheat registers a smart looking interim upside reversal. Anyone who is bearish wheat will try to pooh-pooh today’s price action. One item that technicians cannot forget – the price action does not know the “whys and wherefores”. Funds follow price action. To sum it all up it looks like the wheat market is ready to stand in on a worst case scenario. Just how much short covering we see in the near term remains to be seen.

Daily Support & Resistance for 09/13

Dec Chgo Wheat: $4.34 – $4.50

Dec KC Wheat: $4.34 – $4.50

 

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