Wheat Commentary

storck

Wheat – Just My Opinion

Dec Chgo Wheat closed 7 cents lower ($5.14), March 6 ¼ cents lower ($5.34) & July 6 cents lower ($5.49 ½)

Dec KC Wheat closed 6 ¾ cents lower ($5.17 ½), March 6 cents lower ($5.40 ¾) & July 6 ½ cents lower ($5.57)

US wheat futures continue to stagnate in a range that was set up from Sept 11th to Sept 13th. Strength in the US Dollar, Russia selling wheat out of their reserves, recent rains in Australia and the rebuilding of moisture in the US HRW areas all worked together to pressure the market. Some left-handed support came from relatively steady European futures. The bottom line remains that the US is lacking in market-making business. What I am starting to recognize is that slowly but surely US wheat prices vs. the rest of world are becoming competitive. We were close for last week’s Egyptian tender; cost of freight kept us out of the loop. Looking ahead to the Thursday’s USDA report – news wires polls suggest the US wheat carryout will increase by 15 million bu. and the World wheat carryout will increase by 120 K T.

Advertised basis levels for interior wheat as well as Gulf wheat run unchanged. Spreads in both Chgo and KC showed a bit of a bearish bias which I think is a result of the flat price selling. Over the past couple of weeks intra-market wheat spreads having been trying to show some improvement but are starting show signs of running out of steam. Further upside follow through will be dependent on better business coming our way.

Just how long the near month old trading range lives on remains to be seen. Prices have been seeing a succession of lower highs and higher lows. This type of formation does suggest a breakout one way of the other is forth coming. The breakout normally comes in the direction of the underlying trend. The weekly trend reads higher while the daily trend reads sideways to lower. I’m not sure the USDA will have anything to say to pop us one way or the other. If true its up to the rest of the World to dictate our direction.

Daily Support & Resistance for 10/09

Dec Chgo Wheat: $5.09 – $5.25

Dec KC Wheat: $5.11 – $5.30

 

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