Wheat – Just My Opinion

March Chgo Wheat closed 10 cents lower ($5.42), May 7 ½ cents lower ($5.44) & July 7 ¾ cents lower ($5.44 ¾)

March KC Wheat closed 4 ¼ cents lower ($4.68 ¼), May 4 ¼ cents lower ($4.74 ¼) & July 4 ¼ cents lower ($4.81)

March Mpls Wheat closed 2 ½ cents lower ($5.31 ¼), May 2 ½ cents lower ($5.41) & July 2 ¼ cents lower ($5.49 ½)

Overnight Egypt buys 360 K T. wheat – 180 K T. Russian, 180 K T. Romanian – Average FOB px $227.27 (-$3.25 from previous purchase) – Average CIF px $239.45 (-$6.65 from previous purchase)

Highlights of the USDA Wheat Supply-Demand Report – US – increased exports by 25 million bu. – decreased carryout by 25 million bu. – World – decreased carryout by 50 K T.

The increase in US wheat exports did not come from the SRW sector as its carryout was left unchanged. Exports were increased from the “hard” varieties and the white market. The World data acted as a reminder of plentiful global supply. The Egyptian tender once again saw lower FOB prices as well as noticeably lower CIF prices (a great example of just how hard the freight market has been beaten up or should I say down). I have to think these two issues weighed heavily on the Chgo market. It was quite noticeable to see the liquidation in the inter-market spreads involving long Chgo wheat. I mentioned indirect support was seen in the corn market but it was also quite evident in the KC and Mpls markets.

Interior wheat basis levels don’t change nor does the export basis; they remain firm looking. Today’s break in the Chgo spreads was all about long spec liquidation. Stay mindful that despite today’s break in the Chgo spreads the issue around deliverable SRW stocks remain problematic. KC spreads continue to flatline.

As far as I’m concerned major damage was done to the longer term Chgo wheat charts today. This does not mean to sell it at the market as the majority of the shorter term inter-day charts are developing a modest degree of oversold. March Chgo wheat shows some inter-day gap support at the $5.33 level. March KC wheat still shows some viable support down towards the $4.60 level. It is my opinion that the best wheat trades feature fading short term extremes not chasing them

Daily Support & Resistance – 2/12

March Chgo Wheat – $5.33 – $5.49

March KC Wheat – $4.60 – $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.