Wheat Commentary


Wheat – Just My Opinion

March Chgo Wheat closed 5 ¾ cents lower ($5.56 ¼), May 5 ½ cents lower ($5.53 ½) & July 5 cents lower ($5.53 ¼)

March KC Wheat closed 6 cents lower ($4.67 ¾), May 5 ¾ cents lower ($4.74 ½) & July 5 ¾ cents lower ($4.81 ½)

March Mpls Wheat closed 2 ¾ cents lower ($5.32 ½), May 2 ¼ cents lower ($5.42 ½) & July 2 cents lower ($5.51 ½)

Weekly Wheat Export Sales – 338.6 K T. old crop vs. 200-700 K T. expected – no new crop vs. 0-50 K T. expected

Results of Reuters Poll for February 11th USDA Supply Demand – US wheat carryout 954 million bu. vs. 965 in January – World wheat carryout 287.44 M T. vs. 288.08 in January

Headlines overnight had China cutting some import tariffs on US goods. There was no change to the Chinese tariff on US wheat; it still stands at 25%

Technical overtones vs. fundamental overtones makes trading wheat fairly difficult. Overnight US wheat futures were firm in response to higher European prices and talk China is lowering some tariffs on US goods. French prices were higher on thoughts of additional Chinese buying – Paris futures closed lower on the day. We then found out there was no changes being made with the Chinese tariffs on US wheat. Weekly export sales of US wheat were nothing to write home about. US wheat remains uncompetitive vs. our competition despite lower freight. In the past high freight rates out of the US kept our wheat uncompetitive. Now it’s the stronger US Dollar. US Dollar Index futures are at their highest levels dating back to last October. Last October US wheat futures were 50-60 cents lower vs. where they are now.

Advertised interior basis levels run unchanged vs. where they have been for the past week or so. The Gulf basis for HRW is fully steady while the SRW basis has a softer tone vs. where we were just a few days ago. Chgo spreads ease ever so slightly while KC spreads continue to flatline.

I’m not sure what to do with Chgo wheat – prices are maintaining themselves within the longer term up channel yet the past couple of weeks of price action a technical case can be made that a top may be forming. In in doubt go back to the formula of fading short term inter-day extremes for short term trading opportunities.

Daily Support & Resistance – 2/07

March Chgo Wheat – $5.50 – $5.64

March KC Wheat – $4.62 – $4.75

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.