Wheat Commentary

storck

Wheat – Just My Opinion

Sept Chgo Wheat closed 6 ½ cents lower ($5.20 ¾), Dec 7 ¼ cents lower ($5.27 ¾) & March 6 ¼ cents lower ($5.35 ¼)

Sept KC Wheat closed 10 ½ cents lower ($4.35 ¼), Dec 10 ½ cents lower ($4.46 ¼) & March 10 ¼ cents lower ($4.56 ½)

Sept Mpls Wheat closed 9 ½ cents lower ($5.05 ½), Dec 9 cents lower ($5.20) & March 8 ¾ cents lower ($5.31 ¼)

Weekly Wheat Export Inspections – 569.6 K T. vs. 400-600 K T. expected

Winter Wheat Ratings – Harvested – 97% vs. 97% expected vs. 98% 5-year average

Spring Wheat Ratings – 71% GE (+1%) vs. 69% expected vs. 69% year ago – Harvested – 49% vs. 46% expected vs. 62% 5-year average

Egypt announces 2 optional origin overnight tenders

Initially wheat futures picked up where they left off on Friday, moving higher. A lower US Dollar was touted as the support. At about the time the US Dollar started to recover Chgo wheat futures ran into some technical selling as the rally didn’t last too much longer after the July 31st breakdown gap ($5.38 ¾) was filled. Not only did we see some flat price selling but also inter-market spread liquidation involving long wheat. Russian Ag consultancies continue to edge its wheat crop higher while the EU crop continues to edge lower. Since Russia is considered to be the overseas market maker its slightly higher crop size more than offset the shrinking EU crop.

I’m not seeing any noticeable changes with the advertised interior basis levels. This holds true for the Gulf as well. Sept Chgo wheat gains on Dec as we move closer to 1st Notice Day on Friday. Dec forward spreads went the other way as they were widening. KC spreads ran flat on the day.

Today’s price action is trying to suggest the recent rally may have gone high enough for now. Given everything I know whether its technical or fundamental I’m getting the idea that wheat futures are going to move into a trading range affair. Look at the past few months of trading – Dec wheat has gone nowhere. It looks good and doesn’t follow through and the same can be said when the market is trying to break down. Once again I’ll suggest fading short term inter-day extremes for short term trading opportunities.

Daily Support & Resistance – 8/25

Dec Chgo Wheat: $5.21 – $5.36 

Dec KC Wheat: $4.40 – $4.54

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.