Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 5 ½ cents lower ($5.15 ¼)), Sept 5 ¼ cents lower ($5.18 ¼) & Dec 4 cents lower ($5.28 ¼)

July KC Wheat closed 8 cents lower ($4.62 ½), Sept 7 ¾ cents lower ($4.69 ¼) & Dec 6 ½ cents lower ($4.81 ½)

July Mpls Wheat closed 3 ¾ cents lower ($5.21 ¼), Sept 4 cents lower ($5.32) & Dec 3 ¾ cents lower ($5.45)

Weekly Wheat Export Inspections – 499.3 K T. vs. 350-600 K T. expected

Egypt announces an overnight tender for optional origin wheat

USDA reports the US winter wheat crop is now rated 51% GE (-3%) vs. 54% GE expected vs. 64% GE year ago

USDA reports 3% of the US winter wheat crop has been harvested vs. 5% expected vs. 2% 5-year average

USDA reports 91% of the intended US spring wheat crop has been planted vs. 91% expected vs. 96% 5-year average

USDA reports the US spring wheat crop is now rated 80% GE vs. 66% GE expected vs. 74% GE year ago

Today’s wheat trade was all about the weather in the US as well for our overseas competitors. Harvest is under way in Texas and not quite the southern reaches of Oklahoma. There are dryness concerns for the western Kansas, eastern Colorado HRW crop. It does not appear the US SRW crop will have the problems of excessive moisture at harvest vs. what was seen last year.  The US spring wheat crop is suspected to be finally planted. Western Europe continues to deal with hot and dry issues while the Black Sea has seen beneficial moisture. It should be noted that US wheat futures never saw the nighttime strength that both corn and soybean saw. Prices, however, were able to bounce off of the early day session lows but did stay negative for the rest of the session. Continued weakness in the US Dollar was only good for some left-handed support.

The interior wheat basis is all about the different varieties. The Decatur, IN basis for SRW is 5 cents weaker as harvest approaches. The Wichita, KS basis for HRW is 4 cents better as the producer remains a reluctant seller. The export basis for HRW is a touch better while the SRW export. Both Chgo and KC spreads ran easier on the day in response to the flat price selling.

From a longer term perspective I can see wheat prices are in the process of trying to establish a bottom. From a shorter term perspective they appear to be trading range affairs. The longer term perspective has me eyeballing breaks to suspected support levels while the shorter term look keeps me from chasing rallies.

Daily Support & Resistance – 6/02

July Chgo Wheat: $5.08 – $5.25

July KC Wheat: $4.56 – $4.72

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.