Wheat Commentary
July Chgo Wheat closed 9 ¾ cents higher ($5.19 ¾), Sept 10 cents higher ($5.37 ½) & Dec 8 ¾ cents higher ($5.58 ¼)
July KC Wheat closed 10 ¾ cents higher ($5.39 ¾), Sept 10 ¾ cents higher ($5.59) & Dec 11 ¼ cents higher ($5.82 ¾)
Weekly Wheat Export Sales – old crop vs. -300-100 K T. expected – new crop vs. 250-450 K T. expected
Higher wheat prices were seen once again but this time with a bit of twist. At one point early in the day session wheat prices were as much as 20-21 cents higher. As the day went on those gains were trimmed mostly in part to the bearish in the corn and soy markets. The rationale for the higher prices continues to be poor bushel yields in Oklahoma and probably more importantly the growing conditions in the Black Sea area. Parts of Europe are having problems as well but not as noticeable as to what is happening in Russia. Areas there are either too dry for the developing winter crop or too wet for the spring crop. If these problems continue we can expect to see further drops in global production vs. the 10.0-11.0 M T. drop Y-O-Y the USDA outlined in their May Supply-Demand report.
Interior SRW bids are catching a bid in Toledo. The export market remains quiet. Locations in Oklahoma continue to bid up for HRW. The “however” to that is the export market for HRW eases. Bull spreads were working in Chgo sans the July. Nearby spreads in KC ran flat to a shade easier while the Dec forward KC spreads in improve. If you are believer that world wheat stocks are going to see further noticeable drawdowns in supply I have to think the deferred bull spreads are for you.
It appears the funds have an almost insatiable appetite for owning wheat futures. US wheat futures have the highest volatility within the US Ag complex so the day to day moves, the intra-day moves are going to stay sharp. Even though early ideas for next week’s supply-demand report (the 12th) don’t show it (only minor reductions) the wild card will be the global make-up of this data. Decent looking support for July Chgo is developing in the mid-low $5.10’s and in the mid-high $520’s for July KC.
Daily Support & Resistance for 06/07
July Chgo Wheat: $5.13 – $5.35
July KC Wheat: $5.30 – $5.52
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.