Sept Chgo Wheat closed 2 ¼ cents higher ($5.60 ½), Dec 4 cents higher ($5.82 ¾) & March 6 cents higher ($6.00)
Sept KC Wheat closed 5 ½ cents higher ($5.69 ¼), Dec 5 ½ cents higher ($5.96 ¾) & March 5 ¼ cents higher ($6.14)
Weekly Wheat Export Sales – 382.4 K T. old crop vs. 200-450 K T. expected – no new crop vs. none expected
Egypt was in for wheat overnite – 240 K T. was offered (120 K T. Russian & 120 K T. Romanian) – they bought it all – for those of you that thought US wheat was becoming competitive; US wheat was not offered
It was a wild day for wheat trading on Thursday. Futures began the day firm. Chgo futures were honoring the late May high at $3.70 ½. Egypt tendered for wheat overnite; taking all that was offered to them. European futures were holding firm as well. Mid-morning a story came out saying Ukraine was setting limits on exports. Prices literally exploded as both Chgo and KC prices flirted with limit up. European prices were right along with them with similar gains. Shortly thereafter Ukraine came out and said there were no talks about limiting exports. Ukraine further clarified that every year the powers on high within that country get together with their top traders to try and establish what exports will be for the marketing year. They went on to say this was not an official “direct” limit. Once that story came out US futures prices plummeted back to near unchanged; managing to finish with only modest gains on the day. European prices, closing at 11:30 CDST, did manage to finish with 13-15 cent gains, 18 cents off of their intra-day highs.
Interior cash wheat prices (basis) appear to run unchanged. I’m told cash wheat is moving with the rally. Recent bull spreading activity in Chgo fell apart today. May Chgo wheat, the last month of the current crop year, closed with the best gains on the day. KC spreads were mostly steady through March but then gave way to May 2019. The export basis for wheat does nothing nor should it given the recent run of poor looking export sales.
Today’s price action in wheat is a pretty good looking example of exhaustion; at least for the time being. What’s the time being – probably until next Friday when the USDA outlines the latest for the World outlook. It is my thought we’ll see a modestly lower US carryout projection and a glaring lower World carryout projection. Just how much lower will dictate whether or not prices get off to the races again. As of this writing it is my thought further downside correction will be limited to another 25-35 cents ahead of this report.
Daily Support & Resistance for 08/03
Sept Chgo Wheat: $5.50 – $5.70
Sept KC Wheat: $5.60 – $5.80
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.