Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 12 ¾ cents lower ($5.22), Dec 11 ¾ cents lower ($5.28 ¾) & March 10 ¾ cents lower ($5.35 ½)

Sept KC Wheat closed 13 ¾ cents lower ($4.35), Dec 13 ½ cents lower ($4.46 ½) & March 13 12/ cents lower ($4.58)

Sept Mpls Wheat closed 6 ¼ cents lower ($5.06 ½), Dec 6 cents lower ($5.21) & March 6 cents lower ($5.35)

Weekly Wheat Export Inspections – 500.6 K T. vs. 450-700 K T. expected

US Winter Wheat – Harvested – 74% vs. 79% expected vs. 75% 5-year average

USDA says US Spring Wheat Crop now rated 68% GE vs. 68% expected vs. 76% year ago – Headed – 91% vs. 94% 5-year average

Egypt announces an overnight tender for optional origin wheat

So much for last week’s rally as it has now been given all back and then some. I’ve been saying US wheat futures are a follower of the overseas competition and last week US traders got a bit ahead of themselves and now they are paying for it. Today’s low in the KC market is only 9 cents of so from its contract low. As much as we’ve heard our overseas competition ratcheting their wheat crops lower total world supplies still appear to be more than ample. As much as last week’s rally may have been overdone the recent 3-day sell off appears similar (overdone). That’s the nature of the funds that trade wheat; they rush in and then they rush out.

Advertised basis levels for both SRW and HRW are not seeing any change. The gulf basis levels continue to show a firm tone for SRW which I don’t fully understand. The gulf basis for HRW is steady/stable. Chgo spreads continue to widen influenced by the lack of market making business as well as the funds front end selling. KC spreads ran mostly steady.

Other than a short term oversold I’m not seeing much support or the Chgo Sept market. It’s best looking congestive type support doesn’t come into play until $5.00 and I really don’t think we’re going straight down to that level without trying to do some retracing of the 30 cent plus break over the past few days. Given the KC market’s proximity to its contract low I have to think this market has the best risk to reward ratio in terms of buying.

Daily Support & Resistance – 7/21

Sept Chgo Wheat: $5.12 – $5.32

Sept KC Wheat: $4.28 – $4.43

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.