Wheat Commentary


Wheat – Just My Opinion

May Chgo Wheat closed 6 ¼ cents lower ($5.48 ¾), July 5 ¾ cents lower ($5.49 ¾) & Dec 4 cents lower ($5.62 ½)

May KC Wheat closed 10 ¼ cents lower ($4.83 ¾), July 9 ¾ cents lower ($4.91) & Dec 8 cents lower ($5.09 ½)

May Mpls Wheat closed 6 ½ cents lower ($5.21), July 5 ¾ cents lower ($5.33 ½) & Dec 4 ¾ cents lower ($5.54 ½)

Egypt announces and overnight tender for optional origin wheat – overnight Egypt buys 120 K T. Russian wheat

The amount of wheat Egypt bought was surprisingly small to many. Then again not that much was offered. The US had the second best FOB offer but when freight was added in the US was nowhere to be seen. My thought is that Egypt was a bit surprised at the lack of offers as well as the high price. The fact is that wheat prices out of Europe and Russia are high due to shipping fears, quotas that had been previously set and the success of the new crop not yet fully established. Last night’s US winter wheat crop rating was a bit of a surprise given the hard freeze Sunday night. If the crop was indeed impacted we won’t see the effects for a while. Additionally, dryness in Europe and Russia has been a recent supporting issue. As we speak Europe is seeing needed rain and Russia has it in their forecasts.

Advertised interior wheat basis levels run unchanged. This holds true for the Gulf as well. If I had to suggest a trend I’d call the SRW basis easier while the HRW basis fully steady. Spreads were under pressure in both Chgo and KC. I’m sure spec selling weighed on the spreads. How much of index fund rolling contributed to this remains to be seen. It will be interesting to see how the nearby May/July Chgo spread acts as we approach 1st notice day at the end of the month. We still don’t have any quality for delivery and its still early for the new crop.

If the past two weeks of price action was an upflag on the July Chgo charts this market is in a world of trouble. The upflagging challenged the interim top that was established in late March and is now on the verge of rolling over. After today’s price action in July KC the double top that was established with Monday’s action has this chart looking rather precarious. The other side of that is the decent looking amount of minor support that shows up down toward the low $4.80’s. As of this writing I’m willing to sit and see how the current sell-off plays out.

Daily Support & Resistance – 4/15

July Chgo Wheat – $5.44 – $5.57

July KC Wheat – $4.83 – $4.97

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