Sept Chgo Wheat closed 6 ¼ cents lower ($5.68 ¼), Dec 7 ¼ cents lower ($5.90) & March 5 ¾ cents lower ($6.09 ¼)
Sept KC Wheat closed 6 ½ cents lower ($5.79 ½), Dec 6 ¾ cents lower ($6.07 ¼) & March 6 cents lower ($6.25 ½)
The story hasn’t changed – concerns over growing conditions in Europe, Black Sea, Canada and Australia. Monday afternoon’s greater than expected downgrade of the US spring crop adds to the mix. Monday night, very early Tuesday wheat prices running 10 cents higher in Chgo, 12 cents higher in KC and 11 cents higher in Mpls. About 7:45 AM CDST profit taking set in and prices were never really able to recover. I could not find any particular news to prompt the profit taking other than thoughts of overbought. The nighttime rally in Chgo had prices falling just short of last Thursday’s highs while the KC and Mpls prices did eclipse last Thursday’s highs before falling back.
The interior wheat basis continues to read unchanged as do values at the Gulf. Sept Chgo gains on the Dec while the Dec forward spreads show a bearish bias. KC spreads saw a slight bearish bias upfront. I did see some bear spreading against the KC July suggesting increased acres for next year.
Given the extent of the month old rally in wheat futures it makes sense to see some profit taking ahead of Friday’s USDA report. The trade will be looking at what kind of cuts the US crop may see but more importantly what kind of cuts the World data will see. Between now and Friday I’m thinking Monday’s lows should be viewed as support while today’s highs and or last Thursday’s highs should be viewed as resistance. See the attached file for the results of the traders’ estimates for Friday’s report.
Daily Support & Resistance for 08/08
Sept Chgo Wheat: $5.52 – $5.82
Sept KC Wheat: $5.65 – $5.94
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.