Wheat Commentary


Wheat – Just My Opinion

July Chgo Wheat closed 2 ½ cents lower ($5.16 ¾), Sept 4 cents lower ($5.11) & Dec 2 ¾ cents lower ($5.22 ¾)

July KC Wheat closed 3 cents higher ($4.42), Sept 4 ½ cents lower ($4.40 ¾) & Dec 4 cents lower ($4.62 ½)

July Mpls Wheat closed 1 ¾ cents lower ($5.32 ½), Sept 1 ½ cents lower ($5.31 ¾) & Dec 1 ¾ cents lower ($5.46 ½)

Egypt announces an overnight tender for optional origin wheat.

Weekly Winter Wheat Condition & Progress – 64% GE (+1%) vs. 63% expected vs. 37% year ago – Harvested – 47% vs. 45% expected vs. 61% 5-year average

Weekly Spring Wheat Condition & Progress – 78% GE (+3%) vs. 76% expected vs. 80% year ago – Headed – 56% vs. 73% 5-year average

Wheat futures also saw some “push-pull” on Monday. Initially this market tried to trade with the corn market on Sunday night. Harvest pressure ideas sold into those gains. A Russian consulting agency lowered the Russian crop due to recent hot and dry weather. Russian prices, however, appeared to be easing with the onset of harvest. European wheat prices were easing as well. This week’s production report is expected to show a slight increase in output. The carryin is expected to decline based on the recent old crop stocks report. This in turn is expected to impact the new crop carryout by a like amount.

Not much is happening with the interior wheat basis despite the developing harvest. It seems producers are not happy with current price levels for standard protein wheat. If the producer does have high quality protein wheat he is most definitely holding out for better basis levels. Chgo spreads had a clear bearish bias recognizing the developing harvest for SRW. KC spreads too showed a bearish bias due to the ongoing HRW harvest. The lack of deliveries again the soon to expire July contracts (both in Chgo and KC) has those markets trying to squeeze higher.

Wheat price charts broke hard early last week and have been upflagging higher since last Wednesday. As far as my opinion is concerned I want to sell sharp emotional rallies from current levels. $4.60 should begin good resistance for Sept KC and $5.30 for Sept Chgo. Going forward it would not surprise me to see the wheat market develop into a trading range affair once total global crop sizes are realized (that means getting a better handle on spring wheat crop sizes on a worldwide basis).

Daily Support & Resistance for 07/09

Sept Chgo Wheat: $5.00 – $5.23

Sept KC Wheat: $4.30 – $4.50

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.