Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 11 ¾ cents lower ($5.27 ¾), Dec 10 ½ cents lower ($5.34 ¾) & March 9 ¼ cents lower ($5.41 ¾)

Sept KC Wheat closed 10 cents lower ($4.39 ½), Dec 10 cents lower ($4.50 ½) & March 9 ¾ cents lower ($4.61 ¾)

Sept Mpls Wheat closed 7 ¼ cents lower ($5.08), Dec 6 ¼ cents lower ($5.22) & March 5 ¾ cents lower ($5.36)

Weekly Wheat Export Inspections – 544.0 K T. vs. 450-700 K T. expected

US Winter Wheat Crop – Harvested – 81% vs. 83.5% expected vs. 82% 5-year average

US Spring Wheat Crop – 70% GE (+2%) vs. 68% expected vs. 73% year ago – Headed – 97% vs. 98% 5-year average – Harvested – 1% vs. 3% expected vs. 3% 5-year average

Egypt announces an overnight tender for optional origin wheat

A Russian Ag agency (IKAR) raises the Russian wheat crop to 78.0 M T. The European wheat crop continues to shrink yet prices there moved sharply lower from the sharply higher Euro. With that said the US Dollar continues to move lower but fails to spark any interest in the wheat market. I’ve said it before and I’ll say it again – US wheat futures are a follower of the overseas markets. Demand for US wheat is no better than just okay and unfortunately “okay” exports don’t make a market.

I’m not seeing any changes in the interior advertised wheat basis whether its for SRW or HRW. The same holds true for its respective export markets. Chgo spreads widen noticeably in response to the flat price selling. KC spreads only lost fractionally. I’m told low pro HRW is almost ready to compete in the global market. After today’s break Egypt is back in the market. It will be interesting to see if offers to them fully reflect today’s break. Last week they bought 115 K T. from Ukraine – $211.84 FOB & $225.82 C&F.

It was not a very positive looking performance in the wheat futures market especially given the sharply lower US Dollar. The Chgo market has been flagging higher for the past 4 days after rejecting the mid-July spike high. Given the high we saw on Friday, $5.44 (Sept), followed by today’s sell off suggests the market’s vulnerability to further sell off. The KC market has been more of a consolidating affair near its low end suggesting the bigger picture is not as friendly as the Chgo market has been trying to suggest. The overnight Egyptian tender may try to keep Chgo prices alive but the ease that it breaks keeps me very suspect of higher prices over the near term. Put a gun to my head and I’ll buy KC and sell Chgo.

Daily Support & Resistance – 7/28

Sept Chgo Wheat: $5.20 – $5.35

Sept KC Wheat: $4.35 – $4.47

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.