December Chgo Wheat closed 11 ¾ cents lower ($7.44 ¾), March 11 cents lower ($7.57 ¼) & May 11 ¼ cents lower ($7.60 ¼)
December KC Wheat closed 13 ¼ cents lower ($7.41), March 13 ¼ cents lower ($7.48 ¾) & May 12 ¾ cents lower ($7.51 ½)
December Mpls Wheat closed 4 ¾ cents lower ($9.25 ½), March 4 ¾ cents lower ($9.15 ¾) & May 5 ¼ cents lower ($9.03 ¼)
Flat price wheat moves into a correction phase after the Dec KC contract balked at its old contract high on Monday. Not only is the flat price correcting but also the inter-market spreads. It was just last week Dec KC was holding a 6-7 cent premium over Chgo and now that has reversed. I’m viewing today’s sell-off as mostly technical in nature as world wheat prices remain quite strong amid ongoing interest. Here we have 1 ½ days of correction and here comes Egypt. It seems most World users/importers realize just how tight the global scenario is as it seem like they come after every minor correction. Unfortunately for the US we still haven’t seen any major amounts of business shifting our way. Rumors continue that Russia may enact some export curbs after the first of the year in addition to their current export taxes.
Not much happens with the interior wheat basis for standard protein wheat. I have heard that higher protein wheat basis levels have been moving higher. The export basis for SRW jumped as we moved into the month of October. The rail to the Gulf basis for HRW is quiet. Intra-market spreads in Chgo continue to show a widening trend while the same spreads in KC show a very slight tightening bias.
From a technical perspective flat price wheat shows the potential to break another 20 cents or so before finding support. Unfortunately it seems like world business comes after every little break.
Daily Support & Resistance – 10/06
Dec Chgo Wheat: $7.35 – $7.59
Dec KC Wheat: $7.30 – $7.55
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.