Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 1 1/2 cents lower ($4.72 1/4), Dec 1 ½ cents lower ($4.75 1/4) & March 1 cent lower ($4.80 ¾)

Sept KC Wheat closed 1/2 cent lower ($3.92 1/4), Dec 1/2 cent lower ($4.04 1/4) & March 1 1/4 cents lower ($4.18 3/4)

Sept Mpls Wheat closed 6 3/4 cents lower ($4.87 1/2), Dec 5 1/2 cents lower ($5.05 1/2) & March 4 1/4 cents lower ($5.20)

Statistics Canada Wheat Production – 31.25 M T. vs. 32.3 M T. expected vs. 31.7691 M T. year ago

Weekly Wheat Export Sales – old crop vs. 250-700 K T. expected – new crop vs. none expected

Major world exporters are still trying to figure out how they are going to move this year’s burdensome supply. They are all vying for market share and history tells us that when this occurs lower prices become the norm. For some countries that rely on exports for income this could be devastating as competition will remain extremely high. A great example of what’s going on with this scenario was the Canadian production numbers this morning; All wheat production was down 500.0 K T. vs. last year and 1.0 M T. less than expected yet the market went lower. Prices were able to recover most those losses in KC and Chgo but it was on the coattails of the rally in corn and soybeans. Mpls continues to ratchet lower into new contract lows.

Advertised basis levels for standard protein wheat continue unchanged. This holds true for export values as well. Wheat spreads in Chgo ran unchanged in the front while showing a slight bearish bias going forward. Deliveries against the Chgo Sept contract are doubtful but there are rumors some HRW may be brought in to deliver. KC spreads ran steady upfront; mixed going forward.

Despite the Chgo and KC markets finishing slightly lower it was not a bad technical performance. Recently established minor support was challenged and so far it has held. Dec Chgo closes above $4.82-$4.83 may attract some short covering just as Dec KC closes above $4.10 would.

Daily Support & Resistance for 08/29

Dec Chgo Wheat: $4.71 – $4.82

Dec KC Wheat: $4.00 – $4.09

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.