Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 3 ¾ cents lower ($5.11 ½), Sept 3 cents lower ($5.17 ¼) & Dec 3 cents lower ($5.27 ½)

July KC Wheat closed ¾ cent lower ($4.60 ½), Sept ¾ cent lower ($4.68 ½) & Dec ¼ cent lower ($4.80 ¾)

July Mpls Wheat closed 5 ½ cents higher ($5.24 ¼), Sept 5 ¾ cents higher ($5.36 ½) & Dec 5 ½ cents higher ($5.50 ¾)

Weekly Wheat Export Inspections – 432.9 K T. vs. 400-625 K T. expected

USDA rates the US winter wheat crop 51% GE (unch) vs. 50% expected vs. 64% year ago – Harvested – 7% vs. 12% expected vs. 7% 5-year average

USDA rates the US spring wheat crop 82% GE (+2%) vs. 80% expected vs. 81% year ago – Planted – 97% vs. 96% expected vs. 99% 5-year average

It was a mixed bag for US wheat futures on Monday. Chgo was lower, KC steady and Mpls higher. Harvest weather for the HRW areas in the south, southwestern US Plains couldn’t be better. Dry areas of Europe are seeing beneficial rainfall. The only question here is whether or not its too late for their winter wheat crop. Parts of the Black Sea area are seeing beneficial weather as well except for southern Russia. As we move towards the USDA production/supply-demand report on Thursday traders will continue to deal with the idea of lower supply from the major exporting countries and whether or not it will bring any market making business to the US.

Interior cash wheat markets continue to show a firm bias despite the onset of harvest. I’m told the only movement is from previously contracted sales. The Gulf basis for HRW continues to be firm while not much happens with the SRW export basis. Spreads in Chgo ran softer from the flat price selling as well as the ongoing index fund rolling. KC spreads were steady to only fractionally weaker.

Chgo and KC wheat charts have taken on the look of a broad upflagging formation. Upflags are rarely seen as friendly as more times than not they lead to lower prices. Confirmation of the upflagging rolling over happens with July KC wheat closing below $4.50 and July Chgo wheat closing below $5.05. As of this writing I’m thinking the market will together until we see what the USDA has to say.

July Chgo Wheat: $5.06 – $5.22  

July KC Wheat: $4.55 – $4.73

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.