December Chgo Wheat closed 10 ½ cents lower ($7.81), March 10 ¾ cents lower ($7.92 ¾) & May 10 ¼ cents lower ($7.96 ½)
December KC Wheat closed 7 ½ cents lower ($7.90 ¾), March 7 ¾ cents lower ($7.94) & May 7 ½ cents lower ($7.94)
December Mpls Wheat closed 31 ½ cents lower ($10.44), March 29 cents lower ($10.27) & May 26 ¼ cents lower ($10.02)
Weekly Wheat Export Sales – old crop vs. 180-500 K T. expected – new crop vs. 0-20 K T. expected
Mpls wheat is your downside leader today as profit taking kicked in for one of the larger one day breaks we’ve seen in quite some time. At one point during the day Dec Mpls wheat was down 42 cents. The last time we saw a break of this magnitude was over the 4th of July weekend when it was down 60 cents before finishing down 42 cents. Get used to these kind of moves going forward especially if this year is going to be anything like 2008. The break in the Mpls market far out shadowed the break in the Chgo and KC markets and rightly so since its advance was far greater. The break in the wheat markets is mostly profitaking which took its cue from the recent degrees of overbought. I only see one news item that could have added to this and that is the Russian crop continues to grow vs. recent USDA ideas. I read that the total Russian grain harvest is 95% done and they talk about 78.0 M T. of wheat; the USDA is at 72.5 M T. For what it is worth; in recent days KC has been giving back its inverse to Chgo. Despite today’s run of liquidation KC has stabilized vs. Chgo and actually got some of its premium back. I don’t know if and when we are going to see better exports for the US but the idea is that if we do it will be for the HRW.
Interior cash wheat markets for standard protein are relatively quiet. The rail basis for HRW down to the gulf is fully steady. KC wheat spreads widen a touch with the flat price selling. Given the big cancellations for HRW delivery receipts we saw a couple of weeks ago should keep these intra-market spreads relatively tight especially as we move closer to December delivery. The gulf basis for SRW jumps the other day but the Chgo intra-market spreads stay relatively wide. IN recent days the Dec/March spread trade out to 13 cents which I feel is wide enough. Fun and games will start soon as we draw closer to December delivery.
So – is the bull market over? Personally I don’t think so. Yes, both KC and Chgo registered reversals on Tuesday that involved contract highs and yes, they should be given some creditability. Dec Chgo wheat will find some minor support against the $7.70 level but better down towards the $7.60 level. Dec KC wheat shows initial support against the $7.80 level better against $7.70. As we look ahead to the USDA S&D’s next Tuesday most ideas are suggesting few if any changes. My only question is what will the USDA do about these reports I read that suggest the Russian crop is noticeably larger vs. their previous estimates.
Daily Support & Resistance – 11/04
Dec Chgo Wheat: $7.70 – $7.91
Dec KC Wheat: $7.78 – $8.02
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