Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 24 cents higher ($5.14 ½), Sept 23 ½ cents higher ($5.22 ¼) & Dec 23 ½ cents higher ($5.35 ½)

July KC Wheat closed 25 ¾ cents higher ($4.79), Sept 26 ½ cents higher ($4.90 ¾) & Dec 26 ½ cents higher ($5.11 ½)

July Mpls Wheat closed 14 ¾ cents higher ($5.63 ½), Sept 15 ¼ cents higher ($5.72) & Dec 15 ¼ cents higher ($5.84 ¼)

Weekly Wheat Export Sales – old crop vs. 50-250 K T. expected – new crop vs. 150-350 K T. expected

Short covering resumes in the wheat market with a vengeance led by the KC contract. Since KC led the rally one has to think the HRW areas are indeed having some quality issues given the extreme moisture in those areas in recent weeks. It’s almost a given that the SRW crop does have quality problems. Couple these issues with the strong performance elsewhere within the Ag and it has the wheat spec/fund shorts continuing to cover. Earlier today the International Grains Council increased global wheat production by 4.0 M T. but that news was pretty much ignored which suggests the competition’s wheat crops are in good shape.

The interior cash wheat basis holds steady on Thursday. Given the rally one would think cash sales would continue to improve so no one is really anxious to raise bids. Cash sales have been okay but not as much as one might expect. Gulf values appear to be easing just a touch. Chgo spreads improved ever so slightly within the 2019-20 crop year. The 2019-20 crop year advances noticeably over the 2020-21. Despite the KC market leading the flat price rally spreads were steady to soft up front while the 2019-20 crop gains on the 2020-21 crop.

July Chgo charts are suggesting another test of the resistance that begins with the $5.20 level. I say “begins” as this level of resistance is about 20 cents wide. July KC continues to be far from challenging its resistance; minor at $5.00, better at $5.20. The price action, however, suggests spec/fund shorts will continue to cover and eventually challenge these levels. As long as the aforementioned areas stay wet, susceptible to disease, the bias will be for higher prices.

Daily Support & Resistance for 05/31

July Chgo Wheat: $5.05 – $5.30

July KC Wheat: $4.65 – $5.00

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.