Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 4 ¼ cents lower ($5.23 ½), Dec 4 ½ cents lower ($5.30 ¼) & March 4 ½ cents lower ($5.37 ¼)

Sept KC Wheat closed 2 ¾ cents lower ($4.36 ¾), Dec 3 cents lower ($4.47 ½) & March 3 ½ cents lower ($4.58 ¼)

Sept Mpls Wheat closed 1 ¾ cents lower ($5.06 ¼), Dec 2 ¼ cents lower ($5.19 ¾) & March 2 cents lower ($5.34)

Egypt announces an overnight tender for optional origin wheat – overnight Egypt buys 470 K T. wheat – 350 K T. Russia, 120 K T. Ukraine – average FOB price paid $215.40 (last week $211.84) – average C&F price paid $228.50 ($225.82 last week)

Despite Egypt paying up for a relatively large parcel of Black Sea wheat US futures could not get anything going on the upside today. It seemed the early pressure to the day’s lows were mostly chart-based technical selling. Once again US wheat was not offered at the Egyptian tender as freight out of the US keeps our origin noncompetitive. As far as I’m concerned US wheat business is mostly routine with a Chinese purchase every now and then. Unfortunately their purchases of US wheat are just not enough to give us a sustaining bull market. As overseas harvest moves on it once again appears that Russian wheat will once again be the gorilla in the room. I continue to hear that the EU soft wheat crop continues to shrink but so far it has not gotten the US any market making business.

Advertised basis levels for both HRW and SRW are not seeing any changes. This holds true for both domestic and export. Chgo spreads are stabilizing from their recent weakness. KC spreads continue with the recent tightening but it so gradual that if you’re not paying attention you’re not seeing it happening.

I’m looking at a bit of a conundrum with the wheat charts. The Sept Chgo daily chart appears to be in the process of rolling over while its shorter term inter-day charts are suggesting not to sell the current break. Daily closes below the $5.17 level suggest a move to $5.00. Since the shorter term inter-day charts suggest not selling the current break we’ll focus on selling rallies to recently established resistance. The Sept KC wheat chart is a bit different looking. The daily chart still suggests the momentum is for lower prices but not a whole lot more. I could be wrong but it is starting to look like I should be long hard wheat vs. short soft wheat.

Daily Support & Resistance

Sept Chgo Wheat: $5.16 (?) – $5.32

Sept KC Wheat: $4.28 – $4.43

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