Wheat Commentary

storck

Wheat – Just My Opinion

Sept Chgo Wheat closed 13 ¼ cents lower ($5.33 ½), Dec 16 cents lower ($5.53 ½) & March 15 ½ cents lower ($5.75 ½)

Sept KC Wheat closed 19 cents lower ($5.40 ¾), Dec 18 cents lower ($5.67) & March 17 cents lower ($5.89 ½)

Weekly Wheat Export Inspections – 462.8 K T. vs. 300-450 K T. expected

Weekly Winter Wheat Progress – Harvested – 94% vs. 95% expected vs. 96% 5-year average

Weekly Spring Wheat Condition & Progress – 75% GE (+1%) vs. 73% expected vs. 33% year ago – Harvested – 35% vs. 28% expected vs. 27% 5-year average

Egypt announces an overnight tender for optional origin wheat

The US wheat markets saw follow through selling Sunday night and additional selling during Monday’s day session. This is all about fund/spec liquidation. Granted US ending stocks and World ending stocks came down; they just didn’t come down enough to support all of the recent spec buying. Many in the global trade of wheat disagree with what the USDA had to say in regards to World wheat production as they felt it was too high. For the time being it is what it is until evidence appears suggesting further global tightness. For as much as many want to believe that the US is looking forward to better market making business down the road current spread values are suggesting we have the wheat and then some to meet that demand.

The interior what basis is running unchanged as are Gulf basis values. I find it interesting that through most of the recent rally interior wheat basis levels saw very little change.  Gulf basis values did ease for HRW during the rally while SRW basis levels saw little if any change. In the Chgo market we saw Sept gain on Dec while Dec continues to sell off on its forward contracts. In KC spreads were on the defensive starting with Sept all the way out.

The recent rally in wheat started on July 12th. Fund buying peaked on August 6th. In that time frame funds bought just over 60 K contracts of Chgo wheat. Since the 6th funds have sold back about 28 K contracts. If you believe the wheat market has any bullishness left to it we should not see total retracement. It will be interesting to see if the US offers any wheat to Egypt tonight as some have been trying to say US wheat has become competitive in the World market place. The again they said that at the last Egyptian tender and no US wheat was offered.

Daily Support & Resistance for 08/14

Dec Chgo Wheat: $5.45 – $5.68

Dec KC Wheat: $5.59 – $5.72

 

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