Wheat Commentary


Wheat – Just My Opinion

March Chgo Wheat closed 1 cent higher ($5.22 ¼), May 3 cents higher ($5.18 ¾) & July 2 cents higher ($5.18 ¾)

March KC Wheat closed 2 ¾ cents lower ($4.36 ½), May 5 ¼ cents lower ($4.41) & July 4 ¾ cents lower ($4.48 ¾)

March Mpls Wheat closed 1 ½ cents lower ($5.07 ½), May 4 ½ cents lower ($5.20 ¾) & July 4 ¼ cents lower ($5.30 ¾)

Weekly Wheat Export Inspections – 415.5 K T. vs. 400-700 K T. expected

US wheat futures were initially slammed with the rest of the Ag sector in response to the spiral lower in equities and the carnage in energies. The “however” is that US wheat futures were the first markets to find some support and rally out of the hole. By mid-morning I saw a couple of global tenders (Algeria and Syria) that were not previously planned as it appeared it was immediate reaction to the sharply lower prices. The “rumor mill” is suggesting Russia may institute an export tax is response to its sharply lower currency. The bottom line, in my opinion, is the global winter wheat crop has many ongoing questions to it. We have decades low acreage in the US, the idea of lost acreage in the EU due to excessive moisture and the Black Sea areas are warm and dry leaving them susceptible to a late spring cold snap.

I’m not seeing any changes with the advertised interior wheat basis. These interior levels remain firm mostly form a lack of movement as well as the lack of quality SRW. The export market for HRW holds steady at recent levels while the midday Gulf posting for SRW appears to be a bit easier. Chgo wheat spreads show a firm bias as it looks like the May Chgo contract is ready to pick up where the March will leave off when it expires at the end of the week. KC spreads which have been sideways for the last number of weeks are starting to show a bit of a bearish bias. The USDA update on wheat supply-demand is not expected to show much change from the previous month. The US carryout is expected to increase by 4 million bu. and the World carryout is expected to increase by 440 K T.

July Chgo wheat registers a minor upside reversal for the 89 cent sell-off that started in mid-late January. July KC wheat realizes support against levels that have been holding dating back to late October. If today’s price action flat price and inter-market spreading) is any indication it looks like the wheat market is ready to try and go it alone on the plus side.

Daily Support & Resistance – 3/10

July Chgo Wheat – $5.12 – $5.26

July KC Wheat – $4.44 – $4.58

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.