July Chgo Wheat closed 14 ¼ cents lower ($4.90 ½), Sept 13 ¼ cents lower ($4.98 ¾) & Dec 11 ¾ cents lower ($5.12)
July KC Wheat closed 7 ½ cents lower ($4.53 ¼), Sept 7 ¼ cents lower ($4.64 ¼) & Dec 6 ¾ cents lower ($4.85)
July Mpls Wheat closed 8 ¾ cents lower ($5.48 ¾), Sept 8 cents lower ($5.56 ¾) & Dec 5 ½ cents lower ($5.69)
Flat price (July Chgo) challenges were it broke down from in early February, the $5.20 level, and gets turned away. The break in corn prices, shades of an inter-day overbought, and inter-market spread profit-taking (against short soybeans) was the rationale for the sell-off. One has to realize that the majority of the recent rally was short covering with little fundamental rationale to it. The rally has priced US origin out of global competition. Yes, we have some concerns over quality but then again who really wants low grade wheat especially wheat that is not competitively priced? Our competitors (the EU and Russia) continue to suggest a better than average. Sure we’ll hear of some problem spots but as of this writing they are few and far between.
Toledo improves its SRW bid by 5 cents and the Ohio River improves its SRW bid by 17 cents. Elsewhere SRW bids run unchanged. Despite what appears to be decent improvements in the cash market Chgo spreads were on the defensive due to the flat price selling. I’m not seeing any changes in the interior HRW cash market but it has been running steady to a bit weaker. I have to think we have seen a fair amount of cash wheat move on this rally so why the Ohio Valley improvements? It’s my idea they have concerns over the quality of the SRW. KC spreads eased a bit with today’s flat price selling.
I’m suspecting that the Ag sector as a whole is about to enter a period of backing and filling/consolidation for the near term. All of our markets, wheat included, have seen very sharp run-ups in a relatively short period of time. It is my thought wheat has the least potentially bullish case so this market can see the greatest corrections. I think its time to start stepping lively again meaning its time to leave long term attitudes at the door and time to focus on short term trading as the day-to-day trade can get rather erratic due to the increase in volatility.
Daily Support & Resistance for 05/30
July Chgo Wheat: $4.75 – $5.00
July KC Wheat: $4.42 – $4.60
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.