July Chgo Wheat closed 19 ¼ cents higher ($5.10), Sept 16 ½ cents higher ($5.14 ¼) & Dec 14 ¾ cents higher ($5.25 ¾)
July KC Wheat closed 9 ½ cents higher ($4.55 ¼), Sept 9 ¾ cents higher ($4.68 ½) & Dec 10 cents higher ($4.91 ¾)
July Mpls Wheat closed 18 cents higher ($5.65), Sept 17 ½ cents higher ($5.74 ¼) & Dec 15 ¾ cents higher ($5.86 ¾)
Weekly Wheat Export Sales – -26.0 K T. old crop vs. -100+200 K T. expected – 501.9 K T. new crop vs. 100-400 K T. expected
Wheat continues to be the leader in the clubhouse whether it’s going up or down. After two days of sharp losses ideas of short term oversold and continuing concerns over US crop quality along with concerns over the developing Russian crop due to hot and dry allowed a little bit of buying to go a long way on Thursday. New crop weekly export sales came in above the high side of guesses. Cumulative new crop wheat sales are running at last year’s sales pace. News wires trader polls are suggesting Tuesday’s wheat production report will feature lower totals; All wheat at 1.883 million bu. (-16 million bu.), winter wheat at 1.251 million bu. (-17 million bu.). Spring wheat production totals will not be in this report. The old crop US carryout is expected to decline 6 million bu. and the US new crop carryout is expected to decline by 23 million bu. World projected carryouts have old crop declining by 280 K T. and new crop declining by 3.01 M T. If I had to guess where the cut in the new crop world carryout comes from it would be Australia as this country continues to deal with drought conditions for the third year in a row. It should be noted that US prices went it alone with today’s rally as European prices barely finished higher.
Advertised interior wheat basis levels for standard protein appear to be running unchanged. HRW rail to the Gulf is staying firm while SRW at the Gulf appears to be a touch softer. Chgo bull spreads were noticeably working on Thursday. Was it just the fund aggressiveness with the flat price or are we see the early demand for deliveries? KC spreads ran a shade easier on the day. For what it is worth trying to keep up with the inter-market wheat spreads, Chgo vs. KC vs. Mpls, continues to be pretty nutso.
Is the concern over the US quality and/or the condition of the Russian crop that severe? Personally I think the daily wide ranges are more of a result of the higher volatility. What was once a 10 cent intra-day move is now 20 cents if not greater. Maybe it’s my conservatism but I have a hard time chasing sharp short moves in this market. Last night I cautioned against chasing the break. Tonight I caution against chasing rally. If this market is the short term trading affair I think it is July Chgo wheat should have problems sustaining the current attempt to rally beyond the $5.20 level.
Daily Support & Resistance for 06/07
July Chgo Wheat: $4.95 – $5.21
July KC Wheat: $4.45 – $4.70
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