Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 9 ¼ cents higher ($5.32 ¾), Dec 8 ¼ cents higher ($5.38 ½) & March 7 cents higher ($5.44 ¼)

Sept KC Wheat closed 9 cents higher (4.45 ¾), Dec 8 ½ cents higher ($4.56) & March 8 ¼ cents higher ($4.66 ½)

Sept Mpls Wheat closed 4 ¾ cents higher ($5.11), Dec 5 cents higher ($5.24 ¾) & March 4 ¾ cents higher ($5.38 ¾)

Weekly Wheat Export Sales – old crop vs. 250-650 K T. expected – new crop vs. none expected

US wheat futures catch a bid on Wednesday from ideas that Brazil is interested in US HRW. The continued decline in the US Dollar supports the buying interest. Over the past few days we’ve seen different Russian Ag agencies trying to pinpoint their crop size. Consensus suggests somewhere between 77.0 and 78.5 M T. Earlier this month the USDA suggested 76.5 M T. Word out of the EU suggests their soft wheat crop continues to shrink as they move through harvest. Add the two together and they are almost offsetting issues. So where does that put the US? For the time being US wheat futures are trying to stand in but nothing real conclusive so far; just some flip-flopping over the past few days.

I’m not seeing any changes in the advertised interior basis levels for both SRW and HRW. This holds true for their respective export basis levels. I’ve often talked about how the flat price action dictates the day-to-day spread action. I don’t think today was any different for the Chgo market. It is interesting to note that Chgo wheat spreads have been on the defensive for the past couple of weeks while the KC spreads have been on a slow tightening grind.

Sept Chgo wheat has moved into a minor consolidation pattern. Closes above $5.40 level (Sept) will attract additional buying while closes below the $5.17 level will attract selling. Since the market has been in this consolidating type trade the best approach I’ve seen is fading the shorter term inter-day charts when extremes develop. Chasing bulges and breaks has not worked. For those of you that are looking for the least risk trade I’m favoring the KC market from the long side as the $4.30 level (Sept) is proving to be decent support. With that said I’m still favoring being long KC vs. short Chgo.

Daily Support & Resistance – 7/30

Sept Chgo Wheat: $5.25 – $5.40

Sept KC Wheat: $4.38 – $4.50

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.