Wheat Commentary


Wheat – Just My Opinion

May Chgo Wheat expired unchanged ($5.10 ½), July closed ½ cent higher ($5.02 ¼) & Dec ¾ cent lower ($5.15 ¼)

May KC Wheat expired unchanged ($4.58), July closed 2 ½ cents lower ($4.51 ¾) & Dec 3 ¾ cents lower ($4.70 ½)

May Mpls Wheat expired unchanged ($5.00), July closed ¼ cent lower ($5.08) & Dec ½ cent lower ($5.32 ¾)

Weekly Wheat Export Sales – 203.5 K T. old crop vs. 100-300 K T. expected – 149.8 K T. new crop vs. 150-300 K T. expected

Early follow through selling got exhausted and modest short covering ensued. Weekly wheat export sales were barely worth talking about other than China accounted for one cargo. It is my thought that the short covering we saw was technically inspired as most short term indicators were showing a near extreme degree of oversold. Crop conditions in the HRW areas are split as the western reaches are dealing with developing drought while the eastern reaches appear to be developing in decent fashion. The trade continues to talk about the possibility of freeze damage in the SRW areas from last weekend. Hopefully next Monday’s crop condition ratings will shed some light on this subject. For what it’s worth none of the expiring May contracts saw any flat price trade.

Interior wheat basis levels for standard protein wheat continue to run unchanged. The Gulf continues to ease for HRW while the SRW market continues to show an underlying bid. Chgo spreads showed a tightening bias as did KC spreads. Movement from the producer remains minimal as one, he’s not happy with the price and two, he continues to assess his crop potential.

The short term degree of oversold that we saw yesterday and again early this AM has been taken care of with today’s intra-day rally. July Chgo wheat challenged its mid-March interim low and has managed to bounce. I’m not sure whatever bounce we see is worth much more than 20 cents. The break in the July KC market did not get as deep to challenge supported support at the $4.40 level but whatever short covering rally we see is not worth much more than 20 cents before we run into some decent looking technical resistance.

Daily Support & Resistance – 5/15

July Chgo Wheat – $4.96 – $5.10

July KC Wheat – $4.45 – $4.65

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.