Wheat Commentary


Wheat – Just My Opinion

May Chgo Wheat closed 2 ½ cents higher ($4.30 ½), July 2 ¼ cents higher ($4.39 ½) & Dec 1 cent higher ($4.62 ½)

May KC Wheat closed ½ cent higher ($3.94 ¾), July 1 cent higher ($4.04) & Dec unchanged ($4.36)

May Mpls Wheat closed 9 ½ cents higher ($5.08 ½), July 7 ½ cents higher ($5.21 ¾), & Dec 6 ¾ cents higher ($5.42 ¾)

Stats Canada Wheat Stocks (March 31st) – 15.7 M T. vs. 15.7 M T. expected vs. 16.394 M T. year ago

Mpls wheat is the upside leader on Tuesday prompted by the slow pace of planting. Adding to that are the “prevent plant” dates rapidly approaching. Strength in Mpls prompted short covering in both Chgo and KC. The poor condition of the SRW is leading to some talk of either junk grade and/or abandoned acres. The bottom line here is that the US wheat crop is not yet made nor is it with our global competitors yet the spec trade is grossly short. I think we’ve got a little bit of “the cart ahead of the horse”. On Friday the USDA will give us their first look at the winter wheat crop along with projected carryout data for both the US and the World. Trade guesses are looking at some pretty decent sized numbers.

Not much happens with the advertised basis levels for standard protein wheat. This holds true not only for the interior but for export as well. Nearby spreads in Chgo did not do much but it was noticeable that July and Sept gained on Dec and beyond. I have to call this spec short covering. HRW and HRS saw similar spread action.

The inability to sustain Tuesday morning’s attempt at selling off prompted the short covering for the balance of the day. It’s hard to imagine we see prices eclipsing last weeks’ highs prior to Friday’s festivities (USDA & trade talks). I will admit closes above last week’s highs will give wheat charts a constructive look. Common sense suggests to me July Chgo wheat will trade in a range of $4.30 to $4.35 between now and Friday. A similar range for July KC would be $3.95 and $4.10.

Daily Support & Resistance for 05/08

July Chgo Wheat: $4.33 – $4.45

July KC Wheat: $3.98 – $4.09

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.