Wheat Commentary


Wheat – Just My Opinion

May Chgo Wheat closed 1 ¼ cents higher ($5.25 ½), July 1 ¼ cents higher ($5.20 ¾) & Dec 1 ¾ cents higher ($5.32)

May KC Wheat closed ¾ cent lower ($4.83), July 3 cents lower ($4.84) & Dec 3 cents lower ($5.01 ½)

May Mpls Wheat closed unchanged ($4.98 ¼), July 2 cents higher ($5.10 ¼) & Dec 1 cent higher ($5.34 ¼)

Once again attempts to sell off appear to be well received. I did see a fair amount of inter-market spreading among the varieties. The KC market’s early selling stemmed from the improvement in the US winter wheat crop. Chgo wheat garnered support from the inter-market spreading vs. KC as KC has been a noticeable gainer over the past few weeks. A crop tour of Oklahoma coordinated by the Oklahoma Wheat Commission suggests the wheat crop in that state will decline by 15 million bu. vs. last year’s crop of 110 million. They cited freeze damage from Easter weekend as well as possible yield loss from the ongoing dryness. If Oklahoma saw these kind of losses it makes sense that the Kansas crop will be impacted by these events as well. With all of this said it makes sense for the trade to expect a bullish looking US crop report from the USDA next Monday. It is my belief we could also see a bullish looking new crop World report given reports of lower acreage in the EU as well as the dry spring Russia has been enduring.

Advertised interior cash markets are not showing much change. This holds true for the Gulf as well. July forward spreads in Chgo showed a fractional bearish bias. KC spreads ran fractionally mixed.

Recent attempts to break the Chgo and KC wheat market have not been too successful. In the last couple days Mpls has thrown a couple of reversals at us suggesting it may have gone low enough for the time being. With all of this said it would not surprise me to see the three varieties show a bullish bias going into Monday’s USDA reports.

Daily Support & Resistance – 5/06

July Chgo Wheat – $5.14 – $5.31

July KC Wheat – $4.78 – $4.90 ($4.95)

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.