Dec Chgo Wheat closes 3 ¼ cents lower ($3.98), March ¼ cent higher ($4.17 ½) and July ¼ cent higher ($4.40)
Dec KC Wheat closes 1 ¾ cents higher ($3.99 ¼), March ½ cent higher ($4.15 ¼) and July unchanged ($4.38 ¾)
Chgo wheat has been short covering for 6 out of the last 8 days. KC wheat has been rallying only for three days as it was just mid last week new contract lows were registered. The impetus for the short covering has been a recent spike in World business as well as fears over winter kill (mostly in the US). Adding to the rally is the near extreme short spec position. It’s questionable as to how much of the world business the US has received but the potential is there especially from the recent Saudi business. It’s questionable around the Algerian business as the Saudis have greater restrictions around its specifications. Since the 1st of the month the daily fund trade has bought about 12.5 K contracts of Chgo wheat.
Interior cash wheat markets don’t do a whole lot. The respective export markets, however, appear to have a bid underneath them. Chgo spreads (March/July) have been firming since the 1st of the month. KC spreads haven’t done much in comparison as it was just 2 days ago the March/July KC registered new contract lows at 24 ½ cents under. It is a bit more understandable that Chgo exhibits better strength, not because of business but Chgo is where the greatest concentration of spec shorts are.
The long term trend is down for both Chgo and KC. The short term trend for Chgo is that of an upflag. I’m usually distrusting of downflags. The shorter term look at KC appears to be just a simple rally out of the hole. If the wheat market is indeed making a bottom KC should lead but so far that is not yet happening.
Daily Support & Resistance
March Chgo Wheat: $4.10 – $4.23
March KC Wheat: $4.07 – $4.20
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