December Chgo Wheat closed 4 ¼ cents lower ($5.12 ½), March 4 ¼ cents lower ($5.17 ¼) & July 3 ½ cents lower ($5.26 ½)
December KC Wheat closed 3 cents lower ($4.24 ¾), March 4 ¼ cents lower ($4.33 ½) & July 5 ½ cents lower ($4.47 ¾)
December Mpls Wheat closed 4 ½ cents lower ($5.18 ¾), March 3 ¾ cents lower ($5.35 ¼) & July 3 ¾ cents lower ($5.54 ½)
Weekly Wheat Export Sales – 360.6 K T. old crop vs. 350-600 K T. expected – no new crop vs. none expected
Once again soft looking weekly wheat export sales highlight the fact that US origin is a secondary market. Yes, we have issues at home with quality but I don’t see any issues with supply on a national level nor on a global level. Inter-market spreads are expected to stay firm due to quality concerns. In recent weeks the managed money sector has been on the fence with their net wheat position. They went from a modest short to a minor long; nothing to big either way. Longer term I think their net positions will stay modest in either direction. With that said “sideways here we come”.
Interior wheat basis levels, HRW and SRW, continue with the recent steady to firm mode. HRW is probably the firmer of the two. Export markets for both SRW and HRW continue to show a firm bias; once again HRW probably the firmer of the two. Chgo spreads ran steady to softer mostly due to the flat price selling. KC spreads continue to firm despite the flat price selling.
Whatever the outcome of the USDA supply-demand update is I doubt the flat price of wheat will give us a sustained move in either direction. My bias is for the flat price of US wheat futures is to develop into a long drawn out sideways trading affair. With that said short term pops in any direction will be hard to sustain. The price of the US wheat market will continue to be dictated by the price movements elsewhere in the world. I think the outcome of the recent Egyptian tenders show what happens when prices get too high; there is always a major exporting country out that is willing to undercut their competition to get the business. Did I mention that the US market is secondary market? The bottomline to all of this is to fade the short term extremes and not chase them.
Daily Support & Resistance for 11/08
Dec Chgo Wheat: $5.00 – $5.27
Dec KC Wheat: $4.12 – $4.35
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.