Wheat Commentary
March Chgo Wheat closes 2 ¼ cents higher ($4.20 ½), July 2 ¾ cents higher ($4.46 ¾) and Dec 2¼ cents higher ($4.77 ½)
March KC Wheat closes 1 ¾ cents higher ($4.19 ¼), July 2 cents higher ($4.48 ¼) and Dec 2 cents higher ($4.85 ¼)
Weekly Wheat Export Inspections – 585.6 K T. vs. 250-450 K T. expected
It was a relatively quiet day here; just a 3-4 cent daily price range. Speculative short covering was the primary feature. Better than expected weekly export inspections were good for a 2 cent intra-day rally off of the day’s lows but not much happened after that as those lows were tested shortly thereafter. Developing drought conditions in the central southern Plains along with forecasts for much below normal temps (a lack of snow cover) was a popular topic of discussion. Wheat prices set their day’s high shortly after the day session started but were unable to sustain that strength due to the bearishness elsewhere.
Not much happens with the interior wheat basis – if anything selected locations for HRW have a firm undertone. The gulf has been quiet in recent days but still with a firm undertone. Demand is just so-so – producer and elevator ownership remains quite strong and that has been driving up selected basis locations. Spreads involving March Chgo ran a touch softer while May forward were steady to firm. KC spreads ran fractionally softer.
So has the wheat market made a bottom? Monday’s quiet trade can be read one of two ways – a lack of follow through buying or spec shorts not wanting to show their hand (they’re too short). Demand for US wheat is nothing to write home about but future considerations (lower winter acres and drought developing conditions) would suggest the potential to move higher. My idea is that the worst case scenario is for continued consolidation just above recent contract lows with a bias to move higher – call it year end short covering.
Daily Support & Resistance for 12/19
March Chgo Wheat: $4.15 – $4.26
March KC Wheat: $4.14 – $4.25
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