Wheat Commentary


Wheat – Just My Opinion

May Chgo Wheat closed unchanged ($4.28), July ¾ cent lower ($4.37 ¼) & Dec 1 ¾ cents lower ($4.61 ½)

May KC Wheat closed 1 ¼ cents higher ($3.94 ¼), July 1 ½ cents higher ($4.03) & Dec 1 ¼ cents higher ($4.36)

May Mpls Wheat closed ½ cents lower ($4.99), July ¾ cent lower ($5.14 ¼), & Dec ¼ cent lower ($5.36)

Weekly Wheat Export Inspections – 477.9 K T. vs. 400-800 K T. expected – cumulative to date 21.878 M T. vs. 25.72 M T. projected by May 31st

US Winter Wheat Conditions & Progress – 64% GE vs. 64% expected vs. 34% year ago – Headed – 29% vs. 41% 5-year average

US Spring Wheat Progress – 22% planted vs. 24% expected vs. 49% 5-year average – Emerged – 4% vs. 19% 5-year average

Flat price wheat saw the least amount of impact from the additional tariff threats announced on Sunday. Chgo wheat saw maximum losses of 10 cents, KC maximum losses of 10 cents and Mpls maximum losses of 8 cents. The US does little wheat business with China. I have to think the poor quality of the SRW crop, the unknown finish to the HRW crop and unknown finish to our competitors crops all worked together to support the flat price. Inter-market spreading along with some spec short covering provided the best support. I’m told the frost/freeze alert for European wheat saw minimal impact over the weekend. On Friday the USDA will give us their first look at wheat production for the coming year. We know the HRW crop is in great shape and the SRW crop not so much. Planting of the HRS is behind the norm. How will they add all of this together? One additional note on the upcoming USDA report; world carryout projections will be posted twice – one figure with Chinese stocks and one figure without Chinese stocks. Last month Chinese wheat stocks were 140.0 M T. of the total 275.6 M T. World stocks

I’m not seeing any changes in the advertised interior wheat basis. I know movement is near non-existent. Despite this the gulf reads easier for HRW and unchanged for SRW. Wheat spreads had a fractional bullish bias in both Chgo and KC. I have to think the short covering from the funds had a lot to do with the spread motion as most of their shorts are upfront.

Flat price challenges recent lows (made last week) and the worst close is ¾’s of cent lower. From a technical standpoint we now know where to jump off if we’re trying to be long; below today’s lows. If we are to sustain a recovery in prices it’s imperative to get above last week’s highs on a closing basis. As of this writing my worst case scenario between now and Friday is a consolidating type trade last week’s highs and today’s low.

Daily Support & Resistance for 05/07

July Chgo Wheat: $4.32 – $4.44

July KC Wheat: $3.97 – $4.08

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.