December Chgo Wheat closed 7 ¼ cents lower ($7.52 ¼), March 6 ½ cents lower ($7.65 ¼) & May 5 ¾ cents lower ($7.68 ¾)
December KC Wheat closed ½ cent lower ($7.77 ¼), March ¼ cent lower ($7.80 ¼) & May ¾ of a cent higher ($7.80 ¼)
December Mpls Wheat closed 5 ½ cents lower ($10.21 ½), March ¾ of a cent lower ($10.02 ¼) & May 1 ¼ cents lower ($9.74 ½)
It looks like we have some increased volatility creeping into the wheat futures markets in the form of profit taking. Futures sell off early on all 3 exchanges and then we see a sharp rally out of the early morning low. New highs for the current rallies on the respective exchanges were seen followed by another wave of profit taking. Dec Mpls wheat trades nearly 11 cents lower, rallies 30 cents, sells off by 27 cents eventually finishing 5 cents off of that early morning low. One noticeable feature in the Mpls market was the Dec losing to the March; another form of profitaking. Both Chgo and KC saw similar flat price performances with Chgo taking the biggest flat hit. KC continues to gain on Chgo with the hope that export business to the US will eventually improve. Additionally; last week’s cancellation of 1165 HRW delivery registrations will work to keep the KC inter-market and intra-market spreads firm. Despite all of the price movement we saw today new news was rather slight. After the close Egypt announced an option origin tender. I find this interesting since we have seen only one day (today) of correction. Earlier it was reported that Egypt had 6 months of wheat reserves. I guess they feel tremendous upside potential still exists.
Advertised interior HRW basis levels continue to show a steady to better trend. Not much happens with the advertised interior SRW basis levels. Export basis levels for both varieties continues to show a firmish tone. Chgo spreads have been recently trying to tighten. After today that spread motion is starting to look very suspect. KC spreads are remaining tight. I’m not sure what the 5 cent drop in the Dec/March Mpls spread was all about.
As I mentioned earlier today’s price action is advertising some profitaking may be upon us. I won’t argue with that given the run higher both KC and Mpls have seen. Corrections from time to time are beneficial to extending bull markets’ runs higher. Check out the Chgo weekly wheat chart – this does not look like any top I have ever seen.
Daily Support & Resistance – 10/27
Dec Chgo Wheat: $7.42 – $7.60
Dec KC Wheat: $7.64 – $7.90
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.