Wheat Commentary


Wheat – Just My Opinion

March Chgo Wheat closed 1 ¼ cents higher ($5.40 ¼), May 1 ¼ cents lower ($5.35 ¾) & July 1 ¾ cents lower ($5.35 ½)

March KC Wheat closed 2 ¾ cents lower ($4.52 ¼), May 2 ¾ cents lower ($4.59 ¼) & July 2 ½ cents lower ($4.66 ¼)

March Mpls Wheat closed ¾ cent lower ($5.15 ¼), May ¼ cent higher ($5.30) & July ½ cent higher ($5.39 ¾)

Weekly Wheat Export Sales – 400-600 K T. old crop expected – 25-100 K T. new crop expected

Consolidation is the name of the game for the US wheat futures’ markets following their recent sharp break. New news directly impacting US wheat demand remains slight. It is my opinion that the recent easing in the strength of the US dollar has allowed for the recent attempt at consolidation. Our competitors recent price action is similar to what we are seeing here so its not like we are going it alone. The biggest feature the in Chgo wheat market is how the nearby spread continues to grind higher as we approach 1st Notice Day.

Advertised basis for SRW runs unchanged while staying quite strong in the interior. The Gulf basis for SRW appears to be easing a touch but the nearby spread is having none of that. As I mentioned the nearby spread, March/May, moved into new high ground for the rally that started last May. The question isn’t whether or not we see deliveries but what kind if we see any at all. There is no SRW available for delivery but HRW or spring can be delivered against the Chgo contract. The HRW interior basis shows a bit of easing in Oklahoma; a selected facility went from 60 cents over the March to 53 cents over the May. The Gulf basis for HRW runs unchanged. KC spreads continue to go nowhere fast.

After the recent sharp sell-off wheat charts are trying to sustain some consolidation. Yes, I do see some technical support sitting below current price levels just like there is some decent looking resistance above the market that was created with the recent price break. I’ve got no axe to grind here but it still looks like the path of least resistance is lower. For the near term the US wheat market will continue to take its cue from the US equity market.

Daily Support & Resistance – 2/27

May Chgo Wheat – $5.25 – $5.42

May KC Wheat – $4.50 – $4.68

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.