December Chgo Wheat closed 1 ½ cents higher ($5.16 ¾), March 1 ¼ cents higher ($5.21 ½) & July 1 cent higher ($5.30)
December KC Wheat closed ¾ cent lower ($4.27 ¾), March 1 ¾ cents lower ($4.37 ¾) & July 1 ¾ cents lower ($4.53 ¼)
December Mpls Wheat closed 2 ¾ cents lower ($5.23 ¼), March 3 ¼ cents lower ($5.39) & July 3 ½ cents lower ($5.58 ¼)
Weekly Wheat Export Sales – old crop vs. 350-600 K T. expected – new crop vs. none expected
Flat price wheat in Chgo tries to rally on a lower Australian wheat crop and a lower Argentine crop only to be beaten back by lower corn and soy prices. I’ll ask what about a higher Russian crop and a higher EU crop? Brazil did open the door for some possible US wheat by announcing it is putting into effect a tariff-free import quota for 750 K T. of wheat per year that is open to any country with which it does not have a free trade agreement. It does seem the managed money sector is focusing on buying Chgo and selling KC and Mpls. This is understandable as it’s the Chgo market that gets the majority of the spec business due to it better liquidity. Giving this spreading some rationale is the possibility of the forecasted cold temps for the SRW regions impacting the recently emerged crop as well as the quality issues involving this past year’s SRW crop.
Advertised basis levels for standard protein wheat continue to run steady to higher. I’m told the lesser proteins are noticeably higher. This is either for increased feed demand or for blending purposes due to the short supply of milling quality wheat. The nearby spreads for all varieties have a firm bias. this holds true for export values as well but not so much from demand but a lack of movement. Not only are US producers sitting on their corn and beans but their wheat as well.
For the past couple of days flat price wheat has been trying to move higher; especially Chgo. I’m a little bit mistrusting of this attempt to rally just because of more than ample world stocks and the idea US origin is not competitive. If the current attempt to rally is going to have any upside follow through world wheat stocks are going to have to start coming down and I’m not sure this is going to happen (yet). Yes, the average trade estimates are suggesting slightly lower carryouts but once again I’m more of disbeliever vs. being a believer. My longer term bias leans to a sideways market.
Daily Support & Resistance for 11/07
Dec Chgo Wheat: $5.10 – $5.24
Dec KC Wheat: $4.21 – $4.34
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