Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 10 ½ cents higher ($5.18), Sept 9 ½ cents higher ($5.21 ¼) & Dec 7 ½ cents higher ($5.32)

July KC Wheat closed 4 ½ cents higher ($4.57 ½), Sept 4 ¼ cents higher ($4.70 ¼) & Dec 4 cents higher ($4.93 ¼)

July Mpls Wheat closed 1 cent higher ($5.69 ½), Sept ½ cent higher ($5.78) & Dec ¼ cent higher ($5.87 ¾)

Egypt announces an overnight tender for optional origin wheat – overnight Egypt buys 120.0 K T. of wheat – 60.0 K T. Russian, 60.0 K T. Romanian

The USDA increases the winter wheat crop by 3 million bu.; HRW increased by 14 million bu., SRW declined by 7 million bu. and WW declined by 2 million bu. Total wheat production increased by 6 million bu. The old crop carryout/new crop carryin decreased by 25 million bu. (old crop export improvement). New crop feed demand was increased 75 million bu. The end result saw the new crop carryout decline by 69 million bu. The old crop World projected carryout increased by 1.59 M T. and the new crop increased by 1.33 M T. Global wheat production increased by 3.34 M T. Much of this was offset by total usage increasing 2.6 M T. Not only is the US expecting better wheat feeding but it looks like the world is too. My bottomline to today’s higher prices – thank you very much corn market as well as the ongoing concerns with the developing Russian crop, the Australian crop and the Canadian crop.

I’m not seeing many changes in the interior wheat basis levels for standard protein. If there is a tone of the market it is a bit firmer. Producer sales appear to be minimal at this time. Gulf values also show a firm undertone. Chgo spreads continue to show a firm bias – potential quality issues still loom with the new crop. KC spreads inch in ever so slowly. I know the trade does have some concerns over the quality of the HRW due to recent excessive rainfall but KC spreads have not borne that out.

Today’s rally has Chgo prices challenging interim resistance levels that were created last week. These same resistance levels are also considered major resistance as these are levels the market broke down from last February. The KC market is not as strong looking as the inter-market spreads are challenging some precedence given its weakness vs. the Chgo market. I’m hesitant to chase the flat price rally in Chgo given the aforementioned major resistance levels. Put a gun to my head I’ll come after the KC market given its extreme discount to Chgo.

Daily Support & Resistance for 06/12

July Chgo Wheat: $5.05 – $5.28

July KC Wheat: $4.49 – $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.