Wheat Commentary


Wheat – Just My Opinion

December Chgo Wheat closed 8 ½ cents higher ($4.95 ¾), March 8 ¾ cents higher ($5.02 ½) & July 8 ½ cents higher ($5.10 ¾)

December KC Wheat closed 7 ½ cents higher ($4.15), March 7 ½ cents higher ($4.28 ¼) & July 7 ¼ cents higher ($4.46 ½)

December Mpls Wheat closed 2 ½ cents lower ($5.44 ½), March 2 ½ cents lower ($5.58) & July 2 cents lower ($5.75 ¾)

Sept 1st Quarterly Wheat Stocks – 2.385 billion bu. vs. 2.318 billion expected

2019/20 Wheat Production – All Wheat 1.962 billion bu. vs. 1.968 expected vs. 1.980 previous USDA – All Winter Wheat – 1.304 billion bu. vs. 1.327 expected vs. 1.326 previous USDA – Other Spring Wheat – 600 million bu. vs. 585 expected vs. 597 previous USDA

Weekly Wheat Export Inspections – 466.5 K T. vs. 400-600 K T. expected

Weekly Winter Wheat Progress – Planted – 39% vs. 36% expected vs. 38% 5-year average – Emerged – 11% vs. 13% 5-year average

Weekly Spring Wheat Progress – Harvested – 90% vs. 92% expected vs. 99% 5-year average

It was a two-sided wheat trade, higher early, lower midday and higher late. Both Chgo and KC made new highs for its current run while the Mpls market stumbled against last week’s highs. The initial higher prices came from the idea that the spring wheat crop may be shrinking mostly in the Canadian Prairies as they saw a big snow storm over the weekend. Prices eroded early in the day session as the continued strength in the US Dollar is killing potential business. The Quarterly Stocks report came in higher than expected but that was more than offset by lower than expected production data. The SRW crop saw the biggest reduction; down 18 million bu. vs. the August estimate which validated Chgo being the strongest market. For what it is worth the USDA said it will re-evaluate the ‘spring” production data in November due to the late harvest.

I saw only one change in the advertised interior what basis; Toledo down 1 cent. The Gulf basis for SRW is also a bit easier. All advertised basis, Gulf included, for HRW ran unchanged. Interesting to note that despite the buying we saw in Chgo the intra-market spreads ran just steady out to the new crop; old crop does gain on the new crop. KC spreads saw a similar motion.

$5.00 Dec Chgo wheat has been a target of mine since we saw the interim lows back in early September. Now that this level has been attained it will be interesting to see if we can get any further gains out of the current rally. The consolidation effort we saw prior to last Thursday’s hook reversal measures to $5.08-$5.10. Dec KC wheat registers its best high and close dating back to mid-August. If the technical read is anywhere close to being legitimate $4.35 should be the next resistance level.

Daily Support & Resistance for 10/01

Dec Chgo Wheat: $4.89 – $5.04

Dec KC Wheat: $4.08 – $4.24

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.