Wheat Commentary
March Chgo Wheat closes 3 ¼ cents lower ($4.38), May 2 ½ cents lower ($4.53 ½) and July 2 ¾ cents lower ($4.67)
March KC Wheat closes unchanged ($4.57 ¾), May¼ cent higher ($4.71 ½) and July unchanged ($4.83)
USDA AG Outlook Forum suggests the 2017 wheat acreage will be 46.0 million acres vs. 50.2 million last year
Weekly Wheat Export Sales – old crop vs. 350-550 K T. expected – new crop vs. 0-50 K T. expected
So when was the last time you saw wheat on the buying end of inter-market spreads? The USDA Ag Outlook Forum suggests planted wheat acres for the coming season at 46.0 million acres down 4.2 from the previous year. We already know that winter acres are going to be down 3.7 million acres from the previous year. If the suggestion from the forum is correct it suggests that spring acres won’t have any expansion. Offsetting some of this is a statement from the Argentine Ag minister suggesting their crop size will be 18.3 M T. – the latest from the USDA has the Argentine wheat crop at 15.0 M T. Combining these two items together suggests we have room for a US weather related rally later this spring while world supplies suggest the rally won’t go that far.
Interior wheat basis levels run steady to better. The “better” is out of Toledo – I’m thinking they are looking for some quality SRW. The export market for SRW remains slow while the export market for HRW remains strong. Wheat spreads in Chgo run steady to soft while spreads in KC are steady while maintaining recent weakness. The play here is not in the intra-market spreads but the inter-market spreads – KC gaining on Chgo. For the last few weeks I’ve been with the frame of mind that the US wheat markets are in the process of carving out longer term bottoms. I’m still waiting for “longer term” to start. the short term look at Chgo wheat is a minor upflagging effort finding resistance that established with last week’s reversal activity. The KC price action is not too different. I’m willing to be patient but if we can get a 15-20 cent break from current levels I will view that as a buying opportunity for a weather play as we move into early spring.
Daily Support & Resistance for 02/24
July Chgo Wheat: $4.62 – $4.74
July KC Wheat: $4.76 – $4.90
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