Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 3 cents higher ($5.07 ½), Sept 2 ¼ cents higher ($5.11 ¾) & Dec 2 ¼ cents higher ($5.24 ½)

July KC Wheat closed 4 cents higher ($4.53), Sept 4 cents higher ($4.66) & Dec 3 ¾ cents higher ($4.89 ¼)

July Mpls Wheat closed ¼ cent lower ($5.68 ½), Sept ¼ cent higher ($5.77 ½) & Dec ½ cent higher ($5.87 ½)

Weekly Wheat Export Inspections – 464.8 K T. vs. 400-625 K T. expected

Weekly Winter Wheat Progress & Condition – Harvested – 4% vs. 7% expected vs. 10% 5-year average – Headed – 83% vs. 91% 5-year average – Condition – 64% GE (unch) vs. 63% expected vs. 38% year ago

Weekly Spring Wheat Progress & Condition – Planted – 97% vs. 97% expected vs. 99% 5-year average – Emerged – 85% vs. 93% 5-year average – Condition – 81% GE (-2%) vs. 82% expected vs. 70% year ago

Egypt announces an overnight tender for optional origin wheat – FYI; the US is not competitive

Concerns continue with dryness, if not hot & dry, in different parts of the exporting World; Australia, parts of the Black Sea region and western Canada. Concerns still linger as to the quality of the US new crop due to excessive moisture in the developing winter wheat areas. KC made a minor comeback vs. inter-market spread losses from last week. It should be noted that European wheat futures finished noticeably lower on the day. Reports out of the dry areas of southern Russia suggest little to not much concern over their ongoing dryness. I have to think that some of today’s buying may be in part to the idea that the US corn crop will be short so there might an increase to feed wheat usage. Recent concerns over the quality of the US winter crop, if true, will suggest decent demand for the lower quality wheat.

The interior wheat basis, both for HRW and SRW, shows a firming trend. Since the interim highs were made last week cash sales have slowed. The Gulf market, too, shows an underlying firm trend. Chgo spreads continue to show a firm bias. Will there be a play for July deliveries considering the suggested lack of milling quality new crop? KC spreads continue to look soft but stable vs. recent weakness.

The recent couple of weeks’ price action in Chgo wheat is very similar to that of the corn market; short term consolidation. The longer term look still suggests we may be in a topping out formation but to confirm that we need to see closes below last week’s lows. The KC picture is much weaker looking as it cannot make the claim to short term consolidation. It has always been my belief that if we are to see a bona fide long term bull market KC should lead and all it has done in the last week or so (prior to today) is to lose ground. I’m not sure the USDA can give us anything major on tomorrow’s report to suggest the World wheat market is about to embark on a major bull run.

Daily Support & Resistance for 06/11

July Chgo Wheat: $4.90 ($4.75) – $5.20

July KC Wheat: $4.40 ($4.30) – $4.70

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.