Dec Chgo Wheat closed 5 cents lower ($5.09 ¾), March 4 ¼ cents lower ($5.221¼) & July 1 ¼ cents lower ($5.36)
Dec KC Wheat closed 5 ½ cents lower ($4.77 ¼), March 5 ½ cents lower ($5.04 ¾) & July 3 ¼ cents lower ($5.27 ½)
Egypt announces an overnight tender for optional origin wheat
USDA Wheat Supply-Demand Highlights – US – cut exports 25 million bu. – increased carryout 25 million bu. – World – increased carryin 940 K T. – cut total usage 550 K T. – increased carryout 1.39 M T.
The USDA gives us a bearish looking wheat report and the wheat market responds accordingly. What I did notice that despite the flat price break recently established technical support is holding. There are reports that Russian selling is slowing down. I know their prices have been edging higher but if last week’s Egyptian offers were any evidence of their export slowing that was no indication. It will be interesting to see if the US offers anything at tonight’s tender. March Chgo wheat futures are about 6 cents higher vs. last week’s Egyptian tender. The US Dollar index is about 60 points higher. Export basis levels are about unchanged. My guess is the US won’t participate and if they do freight will keep them from being competitive.
The interior SRW basis is quiet. The interior HRW basis continues to firm. The Gulf basis for SRW appears to be easing while the export basis for HRW is fully steady. Chgo spreads have the old crop losing noticeably to the new crop. KC spreads show a similar bias. Unfortunately the spreads tend to reflect the goings in in the flat price – Flat price has been easing the past couple of days and so have the spreads. If the US export business is going to improve anytime soon the recent easing in the spreads should be viewed as a buying opportunity. If what the USDA had to say today is true about declining exports US wheat futures and their respective spreads will continue to struggle.
Today’s bearish looking supply-Demand update had prices testing recently established support and so far that suspected support is holding. I’m not sure that any of the recent bulge buyers will want to see closes below last Friday’s low; $5.15 ¼ for March Chgo and $4.96 for March KC. If you’re a believer in higher US wheat prices any further weakness should be viewed as a buying opportunity using the aforementioned levels as a jumping off point.
Daily Support & Resistance for 12/11
Mch Chgo Wheat: $5.16 – $5.30
Mch KC Wheat: $4.98 – $5.14
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