Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 12 ½ cents lower ($5.07 ¼), Sept 11 ¼ cents lower ($5.14 ¾) & Dec 10 ¼ cents lower ($5.28 ½)

July KC Wheat closed 18 ¼ cents lower ($4.68 ½), Sept 17 ¼ cents lower ($4.81 ½) & Dec 15 cents lower ($5.03 ½)

July Mpls Wheat closed 3 cents lower ($5.60 ½), Sept 2 ¾ cents lower ($5.70) & Dec ½ cent lower ($5.83 ¾)

What’s the good news – Chgo and KC registered new highs for the current rally. The bad news is prices scored a minor downside reversal for the current rally; an outside day closing lower with KC the ugliest looking as it closed beyond Monday low. Why/how the US wheat markets opened higher on Monday is beyond me. Winter conditions saw decent improvement when declines were expected. The condition of the spring wheat is the best it has been for this time of the season. Some of the global forecasters are trying to bring some moisture into the dryer areas of southwestern Russia and Ukraine (this remains to be seen). Yesterday I could help but notice that the European wheat futures market closed mostly unchanged yet US futures were higher. It never ceases to amaze me that when the funds get emotional fundamentals are tossed to the wind.

Not much change is being seen with the SRW interior basis. For that matter I’m not seeing any change with the Gulf basis for SRW. Chgo spreads had a most definite bearish bias due to the flat price selling as well as the minor index fund rolling. The interior HRW basis has seen some easing and the spreads are showing it as they too saw some noticeable easing. The Gulf for HRW, however, shows a firm tone.

I have to go with today’s technical suggestion that the party here could be over for a while. Yesterday’s improvement in crop conditions suggests the possible quality issue can be overcome. If we are to go higher it will have to come from the overseas markets as they are the global export market makers. We will continue to monitor the weather in the previously mentioned areas of Russian and Ukraine but for the near term it looks like we’re supposed to be selling rallies. I can’t help noticing that the Chgo rally put prices into the thick of previously established resistance (back in February) and KC prices at the low end of suspected resistance that was established in the same time frame this past winter.

Daily Support & Resistance for 06/05

July Chgo Wheat: $5.00 ($4.94) – $5.14

July KC Wheat: $4.60 – $4.75

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.