Wheat Commentary


Wheat – Just My Opinion

December Chgo Wheat closed 12 ¾ cents lower ($5.30 ½), March 10 cents lower ($5.25 ¼) & July 7 ¾ cents lower ($5.31)

December KC Wheat closed 14 ¾ cents lower ($4.22 ½), March 2 ½ cents lower ($4.36 ¾) & July 3 cents lower ($4.51)

December Mpls Wheat closed 4 ½ cents higher ($4.94), March 3 ¾ cents higher ($5.13 ½) & July 3 ½ cents higher ($5.32)

Egypt announces an overnight tender for optional origin wheat – Overnight Egypt buys 295 K T. Russian wheat – Average price paid $235.92 vs. $232.35 on Nov 14th

Wheat prices were higher in the early going with Chgo leading the way. Once the results of the Egyptian tender were seen, Russian origin dominating, prices started selling off. The Russian offers were deemed aggressive and not only did US prices sell off but so did European prices. Additionally it seemed we saw a fair amount of inter-market spreading among the varieties. The recent rally was led by Chgo followed by KC and Mpls bringing up the rear. Today we saw Chgo leading to the downside followed by KC and Mpls actually finished higher.

Advertised interior wheat basis levels are steady to firm for both SRW and HRW. The Gulf is firm for HRW and steady for SRW. The Dec KC spreads collapsed today; early in the day the Dec/March KC spread trade at a 3 cent inverse and then traded down to a 16 cent carry. The spread trade was not as violent in Chgo but did see some minor selling from its early day highs. It smells like we are going to see some additional KC deliveries.

The chart action for March Chgo wheat is trying to suggest the party may be over for now. That doesn’t mean we need to sell the current break but rather focus on selling retracement rallies. This goes along with my longer term idea that US wheat prices will move into a broad sideways trading affair with $5.50 as the topside. The March KC market, because it balked at the $4.50 level, is suggesting a trading range affair between $4.50 and $4.10.

Daily Support & Resistance for 12/04

March Chgo Wheat: $5.20 – $5.34

March KC Wheat: $4.31 – $4.44

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.