Wheat Commentary


Wheat – Just My Opinion

December Chgo Wheat closed ¾ cent lower ($5.30 ¼), March 2 cents lower ($5.31) & July 1 ¼ cents lower ($5.34 ¾)

December KC Wheat closed 3 cents lower ($4.32 ½), March 3 ¾ cents lower ($4.41 ½) & July 3 cents lower ($4.56 ¾)

December Mpls Wheat closed 4 ¼ cents lower ($4.94), March 1 cent lower ($5.12) & July 1 ½ cents higher ($5.32 ¼)

On Monday night flat price wheat went home with a modest looking short term overbought. That was corrected today. The rationale for a firm wheat market has not changed; firm competitor prices, concerns over the wintering conditions in the EU, Black Sea and here in the US. Adding to all of this is the possible delivery make-up for US futures. Quality issues around the SRW market suggest minimal deliveries on Friday for the Chgo market if any at all. IN September they had to deliver HRW to meet their delivery obligations. I’m not sure the HRW is available for this time around. As of this writing I would suspect the delivery make-up as follows; no Chgo, only a handful of KC and a decent sized amount of Mpls.

Advertised basis levels for standard protein wheat appear to be unchanged. I’m told cash wheat movement is minimal at best. I’m not seeing any changes with the export markets. Spreads in Chgo are strong as the Dec/March traded briefly at a ¾ cent inverse before settling back to a ¾ cent carry. These levels represent contract highs. KC spreads are nowhere near as strong but still not a slouch.

Monday night I suggested prices looked like they wanted to go higher but warned against chasing that rally. Today’s backing and filling of Monday’s rally took care of that short term inter-day overbought scenario. As long as our competitors’ prices remain firm and there are concerns over the “global” wintering conditions prices will be biased to move higher. We just have to remember not to chase the short term extremes.

Daily Support & Resistance for 11/27

March Chgo Wheat: $5.24 – $5.40

March KC Wheat: $4.35 – $4.50

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.