Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 8 cents lower ($5.31 ½), Sept 7 ¼ cents lower ($5.35 ½) & Dec 7 ¼ cents lower ($5.46 ¾)

July KC Wheat closed 10 ¼ cents lower ($4.65 ¼), Sept 10 ½ cents lower ($4.77) & Dec 9 ¾ cents lower ($4.99 ¼)

July Mpls Wheat closed 8 cents lower ($5.52 ¼), Sept 8 cents lower ($5.58 ¾) & Dec 7 ¾ cents lower ($5.71 ¼)

Egypt announces an overnight tender for optional origin wheat – last week only Russian and Romanian origin were offered – I doubt US wheat will be offered on this one as well

Good conditions for the HRW crop more than offset the poorer condition for the SRW crop. The unexpected decline in the condition of the HRS was mostly ignored. The trade is catching on to the idea that US wheat is grossly overpriced vs. its global competitors and that was responsible for most of today’s selling. Without better demand an “okay” looking crop is no reason for ownership. Competitors’ crop conditions has beneficial rains for the Canadian Prairies, the possibility of moisture leaking into the dry areas of the Black Sea region and the ongoing drought in eastern Australia is being viewed as old news.

The advertised interior basis for standard protein wheat runs unchanged on the day. The export market for HRW runs unchanged while it looks like the export market for SRW is easing. Spreads eased in all of the varieties stemming from the upfront flat price selling.

Like the rest of the Ag sector the wheat market is in line for some correction. If I had to guess wheat futures may become the weak sister of the Ag complex for the near term. I don’t think it would take much to see July Chgo trade down to the $5.10-$5.00 level. July KC can easily trade down to the $4.45 level. As long as KC maintains this sharp discount to Chgo history suggests there is little rationale for long term ownership at this time. Volatility is staying relatively high so get accustomed to an erratic intra-day and inter-day trade. Fading these short term extremes should be the MO for trading, not chasing them.

Daily Support & Resistance for 06/18

July Chgo Wheat: $5.20 – $5.38

July KC Wheat: $4.55- $4.73

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.