Dec Chgo Wheat closed 1 ¾ cents lower ($5.10 ¼), March 4 ¾ cents lower ($5.22 ½) & July 4 ½ cents lower ($5.41 ¾)
Dec KC Wheat closed 5 ¾ cents lower ($5.02 ¼), March 7 ½ cents lower ($5.23 ¾) & July 7 cents lower ($5.45 ¼)
Weekly Wheat Export Sales – old crop vs. 300-600 K T. expected – new crop vs. none expected
Offsetting reports out of Russia dealing with “grain” exports has the market trying to rally and then failing to follow through in a late sagging type motion. The first report out of Russia talked about limiting “grain” exports to 35.0 M T. The second report talked about limiting “grain” exports to 38.0-to 39.0 M T. The latter figure is the one we’ve been dealing with for the past few weeks. Despite the lower closes the biggest feature of the day dealt with the nearby bull spreads. I have not heard of any new export business but the trend of late has been about cancelling previously registered deliverable receipts. I’m not sure this is about “miller” demand or export business.
Advertised wheat basis levels, both for domestic and export, are running unchanged but with a firm bias. Today is the 1st day of the “Goldman” roll and normally that has a bit of bearish bias to it as it involves passive longs moving out of the nearby. Chgo spreads, however, were noticeably firm going into this procedure. Are we seeing more deliverable receipt cancellations? On October 1st there were 430 wheat receipts registered for delivery; as of last night there were only 142. KC spreads have also been inclined to improve but not to the extent vs. Chgo. On Oct 1st there was 252 wheat receipts registered for delivery; as of last night there were 232.
The last few days of trading has been about trying to grind higher looking at a weaker US Dollar and/or the anticipation of better export business. I’ll grant you the US Dollar has indeed weakened but as far as new market making business is concerned I’m really not seeing it (yet). I’m not sure the USDA can give us anything to move the market one way of the other. The KC trade has weakened noticeably to Chgo – that’s not friendly. The other side of that coin is that bull spreads are working – that is friendly. Put it all together and it suggests the US wheat markets continue to spin their wheels. The trade is looking for the US carryout to increase by 2 million bu. The World carryout is expected to decline by 830 K T.
Daily Support & Resistance for 11/08
Dec Chgo Wheat: $4.96 – $5.22
Dec KC Wheat: $4.90 – $5.15
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