Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 7 cents lower ($4.99 ¼), Sept 5 ¾ cents lower ($5.05 ¾) & Dec 5 ¼ cents lower ($5.15 ½)

July KC Wheat closed 10 ½ cents lower ($4.47), Sept 10 ¼ cents lower ($4.55 ¾) & Dec 9 ¾ cents lower ($4.68 ½)

July Mpls Wheat closed 6 ¼ cents lower ($5.13 ¼), Sept 5 ¾ cents lower ($5.26) & Dec 5 cents lower ($5.40 ¾)

Weekly Wheat Export Sales – 270.4 K T. new crop (2020/21) vs. 200-500 K T. expected

Highlights of June Production/Supply-Demand – US Old Crop – lowered exports 5 million bu., increased carryout 5 million bu. – US New Crop – raised carryin 5 million bu., increased production 11 million bu., increased carryout 16 million bu. – World Old Crop – increased carryout 720 K T. – World New Crop – increased carryin 720 K T., increased production by 4.94 M T., increased carryout 5.97 M T.

Given all of the chatter about lower wheat yields the USDA went the other way. The argument is that we’ve yet to see Kansas harvest and that will bring yields down. Until then we’ll just have to deal with the idea of better then expected yields. World stocks continue to increase. The argument there is that China accounts for 51% of those projected ending stocks. Without China world stocks are still building. In 2108/19 world ending stocks without China were pegged at 140.0 M T., in 2019/20 145.0 M T. and now this year 149.8 M T.

The interior SRW basis remains stable/quiet. Harvest has yet to hit the SRW areas. The SRW basis at the Gulf is stable/quiet as well. Chgo spreads continue to ratchet lower. The interior basis for HRW is lower especially where harvest is happening (Texas & Oklahoma). The Gulf basis for HRW is 9 cents lower over the past couple of days as it feels the effects of the southern harvest. KC spreads continue to grind lower.

Long story short – wheat chart formations are ugly. Chgo wheat broke down out of its three week old upflag yesterday and followed through today. The KC market broke down out of its upflagging formation today. Today’s weekly export sales reflected the first week of new crop sales. 270.4 K T. just doesn’t cut it. US origin needs to get competitive. How does one get competitive – with lower prices.

Daily Support & Resistance – 6/12

July Chgo Wheat: $4.94 – $5.05

July KC Wheat: $4.40 – $4.55

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