March Chgo Wheat closed 7 ¼ cents lower ($4.46 ¾), May 1 ¾ cents lower ($4.55 ½) & July 2 ¼ cents lower ($4.61)
March KC Wheat closed 6 ½ cents lower ($4.34 ¼), May 1 ¾ cents lower ($4.43) & July 3 cents lower ($4.50 ¼)
Weekly Wheat Export Inspections – 440.3 K T. vs. 600-800 K T. expected – Year-to-date 16.961 M T. vs. 18.283 M T. year ago
When corn and soy are rallying and you want to hedge something against them what do you sell? That’s easy, WHEAT!! Yes, the US wheat markets saw a noticeable rally on Friday off of the contract low but no reversal was registered. As much as I think the spec sector is too short there is nothing out there in the near term (that I can find) to spark a noticeable short covering rally. Weekly export inspections were dismal based on expectations. Competing global wheat markets offer nothing that would suggest a rally of substance is in the near term outlook. The rumor mill has some smaller wheat deals being made involving US wheat but nothing that I see is worth writing home about. It seems like that what big deals that are being made are either involving EU wheat or Black Sea wheat, the US gets the little stuff. As long as US demand remains suspect US wheat prices will be hard pressed to sustain much of a rally. Going forward there is some chatter as to the timely planning of spring wheat due to excessive cold and snow pack. If one looks at the Mpls performance today it does not appear anyone is too worried.
Not much happens with the interior SRW basis. This holds true for its respective export market. Chgo spreads, May forward, did show a definite bullish bias. Be aware, however, that these spreads did take a bit of a beating during the recent sharp sell-off in the flat price. The interior HRW basis as well as its export basis continues to show a definitely firm bias. KC wheat spreads, May forward, have been improving since mid last week.
So far all I am seeing from Friday to today is a rally in a bear market. For me to gain some encouragement in this market I need to see Chgo, minimally, close above the Friday-Monday high. As I mentioned the other day we can 20-30 cents rallies from current levels without putting a dent in the current downtrend. Additionally; it would be helpful if the KC market led the way higher. Very rarely do we see anything too positive happening when KC is losing to Chgo. For what it is worth the May KC/Chgo spread is trying to advertise a low may be in place but it has a big hurdle to overcome; 10 cents under to 5 cents under.
Daily Support & Resistance for 03/05
May Chgo Wheat: $4.50 – $4.66 May KC Wheat: $4.40 ($4.36) – $4.54
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