Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 10 cents higher ($4.84 ½) Dec 7 ¾ cents higher ($4.82 ¼) & March 8 ½ cents higher ($4.87 ½)

Sept KC Wheat closed 2 cents higher ($3.82), Dec 5 ¾ cents higher ($4.03 ¾) & March 5 ½ cents higher ($4.17 ½)

Sept Mpls Wheat closed 10 ¼ cents higher ($4.87 ½), Dec 7 cents higher ($5.03 ¾) & March 7 ¼ cents higher ($5.18 ¾)

US wheat futures pick up where they left off on Monday; moving higher. The rationale for the higher prices is pretty much the same story we had on Monday; dryness concerns for the wheat crops in Australia and Argentina. Thursday’s USDA report for wheat will only be for Supply-Demand as production updates will not occur until the end of the month. So what will the USDA say about Supply-Demand? I think its too early in the marketing season to see any noticeable changes in the US data. World numbers should remind us of plentiful supply and not enough demand to offset. Looking at year-to-year stats world production jumped 38.0 M T. vs. one year ago and the projected carryout jumped 10.0 M T. vs. one year ago. So we were able to offset a good portion of the production increase but not all of it.

Few if any changes are being seen with the interior wheat basis. I’m told movement is no great shakes but then again demand has been no great shakes. SRW stocks have been dealing with quality issues; those Chgo spreads took a bit of breather today. KC spreads have been gradually narrowing dating back to the first week of June. When deliveries started against the Chgo Sept contract we saw HRW delivered. The HRW has been blended with the SRW to help solve some of the quality issues.

For the last few weeks I’ve talked about wheat prices being in a well-defined down channel. Last week prices found support against the low side of the channel. The recent 30+ cents rally in Chgo now has prices challenging the high side of the proposed channel. Given the upcoming report on Thursday I would be a bit skeptical about chasing the current rally any further.

Daily Support & Resistance for 09/11

Dec Chgo Wheat: $4.74 – $4.85 (?)

Dec KC Wheat: $3.95 – $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.