Sept Chgo Wheat closed 7 ¼ cents higher ($5.53 ¾), Dec 6 ¾ cents higher ($5.73 ¼) & March 6 cents higher ($5.87 ¾)
Sept KC Wheat closed 8 ¾ cents higher ($5.56 ½), Dec 9 ½ cents higher ($5.84 ¼) & March 9 ½ cents higher ($6.01)
The trade continues to focus on the World wheat pile shrinking. With that said Chgo wheat comes within 6 cents of its late May high. KC wheat comes nowhere close to its late May high as at the time KC was running at a 20 cent premium to Chgo (currently 3 cents). Nonetheless it was very strong price action in the early going Tuesday morning. Profit taking set in by mid-morning due to ideas of a short term overbought as well as European prices unable to sustain their challenge of last week’s highs. European wheat futures finished no better than mixed. When Europe was easing into its close Chgo futures actually traded slightly lower on the day after being up as much as 17 cents. Late short covering prompted by beans making news highs enabled US futures to finish well off of its intra-day lows. Don’t be surprised to see US wheat futures under the gun tonight especially if Europe doesn’t respond to the US’ higher close.
Interior cash wheat prices remain quiet as do export prices. Bull spreads were working noticeably in Chgo, not quite as much in KC. We have to remember that Chgo is the bigger market for trading as it has the best liquidity so its moves might be a bit more pronounced.
Despite the late short covering rally in the US futures the majority of the day’s trade brought about ideas of exhaustion at least for the time being. The correction may come in the form of a volatile trade that may turn out to be no more than consolidation at or just below current levels. As much as I would like think this market has great potential for higher prices going forward I have to ask myself is it as easy as closing my eyes and just jumping in?
Daily Support & Resistance for 08/01
Sept Chgo Wheat: $5.40 – $5.65 ($5.70)
Sept KC Wheat: $5.43 – $5.65 ($5.72)
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.