Wheat Commentary


Wheat – Just My Opinion

May Chgo Wheat closed 26 ¾ cents higher ($5.35), July 24 cents higher ($5.32 ½) & Sept 21 ¼ cents higher ($5.35 ½)

May KC Wheat closed 19 cents higher ($4.65 ½), July 17 ¼ cents higher ($4.69 ½) & Sept 16 ¾ cents higher ($4.77 ½)

May Mpls Wheat closed 10 ½ cents higher ($5.19 ¾), July 10 ½ cents higher ($5.28 ½) & Sept 9 ¼ cents higher ($5.36 ½)

Weekly Wheat Export Sales – 338.4 K T. old crop vs. 200-600 K T. expected – 143.8 K T. new crop vs. 50-100 K T. expected

China suspected of buying US HRW coupled with miller demand (bread is flying off of the shelves) has US wheat futures vaulting higher. Weekly export sales were nothing special. I think the spec trade became a complacent short in lieu of what’s been happening in the equity markets as the hung their hats on the “risk off” mentality. Adding to all of this we are no where near in establishing our new crop, in the US or globally. Personally I don’t think we are going to see that much export business in the near term given the massive rally in the US dollar. Chgo futures will still have to deal with the lack of quality SRW. It’s the KC market where the spec became the complacent short.

Advertised interior basis levels for standard protein wheat continue to show minimal changes. Hefty premiums continue to be bid for SRW quality. The Gulf basis does edge higher. Bull spreads were working in all three of the US varieties but I have to think a lot of that was short covering form the spec sector and they trade the nearby contracts were there is the greatest liquidity.

If Chgo wheat sees another day like we saw today prices will be challenging the neckline of the proposed top that was completed in the third week of February. In the last two days July Chgo wheat has rallied about 45 cents and July KC wheat has rallied about 50 cents over the past 3 days. Normally rallies of this magnitude will attract some backing and filling. I would be hesitant to chase a further rally on Friday. Yes, we may have done some business (exports) in recent days but I’m not sure it is great enough to sustain further rallies over the near term. I have to think a good portion of the rally is that the spec just got too short. Unfortunately much of the managed money sector has “herd mentality”. Give them another day of having at it and I would say that’s enough for the near term.

Daily Support & Resistance – 3/20

July Chgo Wheat – $5.20 – $5.42

July KC Wheat – $4.56 – $4.82

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.