Wheat Commentary


Wheat – Just My Opinion

Sept Chgo Wheat closed 7 ½ cents higher ($5.03 ½), Dec 4 ¼ cents higher ($5.08 ½) & March 2 ¾ cents higher ($5.18)

Sept KC Wheat closed 4 ½ cents higher ($4.36 ½), Dec 3 ¾ cents higher ($4.54) & March 3 ½ cents higher ($4.70 ¾)

Sept Mpls Wheat closed 8 cents higher ($5.32 ½), Dec 6 ½ cent higher ($5.43 ¼) & March 5 ½ cents higher ($5.56 ¼)

Weekly Wheat Export Inspections – 390.7 K T. vs. 350-550 K T. expected

Weekly Winter Wheat Progress – Harvested – 75% vs. 81% expected vs. 86% 5-year average

Weekly Spring Wheat Condition & Progress – 73% GE (-3%) vs. 76% expected vs. 78% year ago – Headed – 97% vs. 98% 5-year average

If one reads the media coverage on today’s US wheat trade they will tout concerns over a declining Russian wheat crop. Last week the Russian consulting agency, SovEcon, reported a crop size of 73.7 M T. with exports projected at 31.5 M T. When this news was announced the reaction was minimal. This morning another Russian consulting agency, IKAR, suggested the their crop is 76.4 M T. up from previous estimates of 76.1 M T. European wheat futures struggled to maintain higher prices on the day. Ukraine reports that 60%-70% of this year’s wheat crop will make milling grade. From what I can gather no major wheat exporting nation will suffer from a lack of milling grade wheat. So what was today’s buying all about? I think it was all technical in nature as some short term moving averages fell by the wayside when prices moved through Friday’s high. The end result was an outside day with closes above the previous day’s highs.

Advertised basis levels for standard protein wheat are not seeing any changes. I’m told that premiums for higher protein wheat are moving higher. I believe the demand for higher protein SRW is driving the Sept/Dec Chgo spread higher. This spread has improved 6 cents or so over the past 4 trading days. Spreads in the KC market have been improving since earlier July but are not as dynamic as the Chgo spreads.

Today’s outside day with the higher closes are trying to suggest the flat price has gone low enough for now. I continue to be a bit hesitant over how much higher prices could go as US origin to the World remains uncompetitive.  Once again be careful chasing short term extremes. If this year is going to be like last year get ready for some sideways price action to develop.

Daily Support & Resistance for 07/30

Sept Chgo Wheat: $4.94 – $5.10

Sept KC Wheat: $4.30 – $4.42

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.