Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 8 ¼ cents higher ($4.85 ¾) Dec 6 ¼ cents higher ($4.83 ¾) & March 5 ¼ cents higher ($4.89 ¼)

Sept KC Wheat closed 3 ¼ cents higher ($3.80), Dec 5 cents higher ($4.03 ½) & March 5 cents higher ($4.17 ½)

Sept Mpls Wheat closed 10 cents higher ($4.95 ¼), Dec 5 cents higher ($5.07 ¼) & March 5 cents higher ($5.22)

Weekly Wheat Export Sales – 611.0 K T. old crop vs. 300-600 K T. expected – -8.2 K T. new crop vs. none expected

Highlights of USDA Wheat ReportUS – Left all data unchanged with previous month – World – Increased carryin by 1.75 M T., increased carryout by 1.11 M T.

It is my opinion that the USDA wheat report was a big nothing. I don’t think it was surprising the USDA left the domestic data unchanged and gave us minor increases in the World carryout projections. What was surprising was the solid looking price performance that resulted. All the rain that has been happening in spring wheat Plains area can’t be helping what’s left there to be harvested; maybe some 3 million acres. Helping the wheat market’s performance today was the bearish looking price action in the US dollar; it challenged recent contract highs only to turn tail lower on the day. If US wheat is going to see a sustainable move higher we need to see better export market share. Wheat prices can only go so high on the coattails of soybeans and corn.

The only change I’m seeing in the advertised wheat basis is the Ohio River easing by 5 cents. the HRW basis at the Gulf continues to show a firm undertone (steady today) while the basis for SRW has been steady dating back to the beginning of the month. Chgo wheat spreads continue to show a bullish bias while KC spreads ran relatively flat on the day. The volatility in the Chgo spreads are more visible while KC spreads tend to be creepers; slow and steady to its underlying trend.

The immediate downtrend in Dec Chgo wheat is gone. Today’s close over $4.83 (just by fractions) is trying to suggest the next stop on the upside will be something closer to $5.00. I’ve never been good at chasing short term extremes in Chgo wheat and I won’t start now. Yes, Chgo Dec wheat can trade back to $5.00 on technical considerations alone but unfortunately I’ll want to see some fundamental considerations to go along with it. Right now I’m not seeing the fundamental considerations other than the general bearishness to the US Ag sector may be fading a bit. When in doubt I try to stay out – I’m in doubt right now.

Daily Support & Resistance for 09/13

Dec Chgo Wheat: $4.78 – $4.95

Dec KC Wheat: $3.97 – $4.10

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.