Wheat Commentary

storck

Wheat – Just My Opinion

March Chgo Wheat closed 12 ½ cents lower ($7.57 ¾), May 13 cents lower ($7.60 ¼) & July 14 cents lower ($7.55 ¼)

March KC Wheat closed 13 ¾ cents lower ($7.78), May 12 ¼ cents lower ($7.79) & July 10 cents lower ($7.79)

March Mpls Wheat closed 7 ¾ cents lower ($9.20 ½), May 7 ¼ cents lower ($9.18 ¼) & July 5 ¼ cents lower ($9.14 ½)

Weekly Wheat Export Sales – old crop vs. 150-400 K T. expected – new crop vs.0-50 K T.  expected

Dec 1st Quarterly Wheat Stocks – 1.390 B bu. vs. 1.421 B bu. Expected

2022 Winter Wheat SeedingsAll Winter Wheat Acres 34.397 M vs. 34.255 M expected – HRW 23.8 M vs. 24.034 M expected – SRW 7.07 M vs. 6.555 M expected – WW 3.56 M vs. 3.577 M expected

Highlights of January Supply/Demand Wheat ReportUS – lowered imports by 10 M bu., lowered feed use by 25 M bu., lowered exports by 15 M bu., increased carryout by 30 M bu. – S-T-U 31.99% vs. 29.85% month ago vs. 40.02% year ago – World – lowered carryin by 820 K T., increased production by 710 K T., lowered usage by 1.88 M T., increased carryout by 1.77 M T.

Prior to the past couple of days the poor price action in the wheat market became justified after seeing the what the USDA had to say this morning. Yes, the quarterly stocks figure came in lower than expected but the carryout numbers coming higher than expected due to cuts in demand was the tell-all. This cut in demand not only held true for our domestic demand but for global demand as well. You can have short crop but with no demand that short crop just a bit bigger. Adding insult to injury was the higher-than-expected wheat seedings especially for SRW. This past fall there was a lot of chatter how SRW acres would suffer due to the late harvest (guess not). I’m not sure there is a lot left on the downside for the wheat market over the near term while I’m thinking this market goes nowhere fast for a while. The next chance for a sustained rally here is when we start thinking about the growing conditions once the winter crop comes out of dormancy/starts developing.

Both the interior and export basis for wheat shows a steady with an underlying firmness due to a lack of cash selling. The producer is looking at current levels vs. where we were just two months ago and says, “if I didn’t sell then I’m not selling now”. It is interesting to note how spreads ran in Chgo (almost bullish looking) while in KC and Mpls the liquidation was quite apparent (biased to put carry into the price structure).

Until we have a weather play to focus on wheat futures should move into a sideways mode. As I mentioned earlier, I don’t think there is a lot left on the downside vs. what we saw late last week. Rallies will come from outside influences as well as flurries of global business. My approach will be fading the short-term inter-day extremes for short term trading opportunities. I don’t think there are any home run opportunities left in this market.

Daily Support & Resistance – 01/13

March Chgo: $7.46 – $7.67

March KC: $7.67 – $7.89

The risk of trading futures and options can be be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.