Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 3 ¼ cents lower ($4.97), Sept 3 cents lower ($5.00) & Dec 3 cents lower ($5.09 ¾)

July KC Wheat closed 6 cents lower ($4.46 ¼), Sept 6 cents lower ($4.52 ¾) & Dec 6 cents lower ($4.64 ½)

July Mpls Wheat closed 1 ½ cents lower ($5.04 ¾), Sept 1 ¾ cents lower ($5.16 ¼) & Dec 1 ½ cents lower ($5.29 ¾)

Weekly Wheat Export Inspections – 440.8 K T. vs. 300-600 K T. expected

USDA reports 60% of the intended spring wheat acreage has been planted vs. 80% 5-year average – expectations were to see 60%

USDA reports the US winter wheat crop is now rated 52% GE (-1%) vs. 66% year ago – expectations were to 53% GE

Flat price wheat, Chgo & KC, continue with their recent grind lower. The trade wants to talk about more than ample global supply. Recent weather in the US HRW areas appears to have stabilized yield potential. The shape of the SRW remains up in the air as efforts to assess freeze damage from a couple of weeks ago are continuing. Recent weather overseas has also stabilized yield potential. The EU and Black Sea crop may not be at its greatest potential but its not the worst. The next 4 weeks or so of weather will decide final yields. Weather forecasters will suggest their dry bias will continue. So while we look at yield potential we have to remember that US origin for export continues to play second fiddle to the overseas competition.

Interior cash wheat markets (basis) for standard protein continue to see unchanged bids. Movement is no better than slight as producers try and assess new crop potential and are not happy with the decline in futures. Not much happens with the export markets as US business continues to be not a lot to write home about. Wheat spreads in both Chgo and KC ran flat to fractionally lower. Given the selling we have seen in the futures market it is almost a positive spreads have not lost further.

The recent price action leaves a lot to be desired if you’re trying to have a friendly bias to the wheat market. I would like to believe July KC has some decent support closer to the $4.40 level. Granted July Chgo took out its March lows but downside follow through was lacking. I’m not wild about selling into the current break but so far I don’t see much in the price action that I can hang my hat on. Maybe another whoosh to the downside and I’ll show my “hero” side and take a stab at ownership.

Daily Support & Resistance – 5/19

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.