Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 15 cents higher ($5.13 ¾), Sept 13 ¾ cents higher ($5.15 ¼) & Dec 12 ¼ cents higher ($5.22 ¾)

July KC Wheat closed 11 ¾ cents higher ($4.53 ¼), Sept 11 ½ cents higher ($4.59 ¾) & Dec 11 ¼ cents higher ($4.71 ½)

July Mpls Wheat closed 12 ¼ cents higher ($5.20 ½), Sept 12 cents higher ($5.31 ¾) & Dec 11 ½ cents higher ($5.44 ¼)

Weekly Wheat Export Sales – old crop vs. 100-250 K T. expected – new crop vs. 100-400 K T. expected

Here’s what was behind today’s rally in wheat – Russia downgrades its total grain crop by 5.0 M T. to 120.0 M T., persistent fears of dryness going forward in the Black Sea and EU wheat regions, noticeably higher European wheat futures today, private crop tours in the US HRW southern areas finding yields that may not add up to what the USDA alluded to earlier this month, last Monday’s lower SRW ratings and lastly forecasts suggesting inundating rains in the latest 6-10 day for the harvest ready areas of Texas and the soon to be ready harvest areas of Oklahoma. Not to be discounted is the slow rate of planting of spring wheat in the US northern Plains. All of this acted as a catalyst for the specs to do a 1, 2, 3 cover your shorts.

Advertised interior basis levels for wheat continue to show no changes. The HRW market at the Gulf continues to ease in anticipation of Texas harvest. I’m not see any changes in the SRW basis at the Gulf. We have to remember that for the time being the US is a secondary export market to our overseas competitors. HRW harvest is right around the corner so don’t expect to see any eye-opening strength. Chgo spreads firmed with the flat price short covering. Spread strength in both KC and Mpls was only fractional. Why were Chgo spreads showing the best strength – because Chgo is the playground for most speculators.

Despite the sharpness of today’s rally July wheat prices ran right up to resistance levels that were created early last week, $5.15 to $5.20. The KC market has much further to rally if it is going to challenge the levels it broke down from last week, something closer to the mid-low $4.70’s. July KC did register an interim reversal that did feature new lows for the move with an outside day closing above the previous day’s high.

Daily Support & Resistance – 5/21

July Chgo Wheat – $5.05 – $5.25

July KC Wheat – $4.47 – $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.