Wheat Commentary


Wheat – Just My Opinion

Estimates for October USDA Wheat Carryout (Sept estimate)

Ave. US Wheat Carryout Estimate – 1.015 billion bu. (1.015 billion bu.) – Ave. World Wheat Carryout Estimate – 285.17 M T. (286.51 M T.)

December Chgo Wheat closed unchanged ($5.00 ¼), March ¾ cent lower ($5.07) & July ¼ cent lower ($5.16 ¼)

December KC Wheat closed 3 cents higher ($4.13 ¼), March 2 cents higher ($4.26 ¼) & July 1 ½ cents higher ($4.45 ¾)

December Mpls Wheat closed 1 ¾ cents lower ($5.41 ¾), March 1 ½ cents lower ($5.55 ½) & July 2 ¼ cents lower ($5.72 ½)

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

In its request for a partial trade deal China suggests they will buy 3.0-4.0 M T. of US wheat. This would be consistent with recent years that China has indeed imported 3.0-4.0 M T. of wheat from various suppliers. The bearish news of the day was a Russian Ag Ministry suggesting this year’s wheat crop is near 78.0 M T. Last month the USDA pegged them at 72.5 M T. If this most recent estimate is accurate it would continue to have Russia as the primary player in World exports. An increase of this size would totally offset the idea of lower Australian and Argentine production. Tomorrow the USDA will update Wheat supply-demand; minimal changes are expected. One of the wild cards we are currently dealing with is the spring wheat that is still sitting in the fields of Montana, N. Dakota and the Canadian Prairies. Over the near term there is a fierce winter storm being forecasted followed by the coldest temps of the season for this area. Will it be lost bushels or just poor quality? The USDA will update US spring wheat production in November.

Not much happens with the advertised basis for standard SRW protein. Chgo spreads did show some minor improvement. KC spreads appear to have rejected the technical sell signal that was suggested late last week. Intra-market wheat spreads are a complicated animal. Chgo deliveries have to be satisfied with HRW due to the poor quality of this past season’s SRW crop. Yet overall US export demand remains nothing to write home about. What to do – What to do!!!

KC wheat charts look like they want to go higher. The best looking resistance for Dec KC is closer to $4.32 especially if this market can get through $4.20. Dec Chgo wheat looks like it wants to see what the $5.10 on up resistance level looks like. Dec Mpls wheat looks like it has some pretty decent looking resistance at the $5.50 level. I’m not sure what will get these markets to the aforementioned resistance levels other than European and Black Sea prices continuing to move higher. One has to remember that US origin is a secondary market so it is a follower, not a leader.

Daily Support & Resistance for 10/10

Dec Chgo Wheat: $4.90 – $5.10

Dec KC Wheat: $4.02 – $4.20 (?)

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