March Chgo Wheat closed 3 ½ cents higher ($5.06 ¾), May 2 ½ cents higher ($5.13) & July 1 ¾ cents higher ($5.20 ¼)
March KC Wheat closed 3 ¾ cents higher ($4.92 ½), May 2 ½ cents higher ($5.03 ¼) & July 1 ¾ cents higher ($5.14 ¼)
Ideas of a short term oversold prompted some short covering in US wheat futures on Wednesday. I’m calling it “New Year” buying. The trade continues to talk about how Russia cannot continue with its current pace of exports. It was their announcement of a 37.0 M T. export limit vs. the previous 34.0 M T. limit that kept pressure on the market over the past number of days. It’s hard to imagine that the Chgo wheat market finished 76 cents higher on the year but it did. This in turn will bring some index fund selling into the market starting next week. Most are already aware of this so the “smart guys” will be in position waiting for this event. Other than that the US wheat market will struggle to latch on to something to get us out of the current hole. To date disappearance remains nothing to write home about.
Interior cash markets show little if any changes. This holds true for the export markets as well. Chgo spreads continue to be influenced by the goings on in the flat price. To a lesser extent KC reacts to the flat price direction as well. Many will tout US wheat prices have gotten cheap vs. the competition. At one of the recent Egyptian tenders we saw a US FOB offer being the cheapest; when freight out of the US was added in we were no longer competitive.
Weekly wheat charts are on the verge of rolling over. Daily wheat charts are hinting at they don’t want to go any lower. I still say the short term charts, the inter-day charts, are still the best indicator for price movement. After the last two weeks of sell off they came into today pretty beat up looking. Until we see some better sustained business or noticeably higher prices from our competitors US wheat futures will remain a 40 cent trading range market (currently near the low end).
Daily Support & Resistance for 01/03
Mch Chgo Wheat: $5.02 – $5.14
Mch KC Wheat: $4.88 – $5.00
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.