Wheat Commentary
May Chgo wheat closes 2 ¼ cents higher ($4.24), July 2 ¼ cents higher ($4.31 ¾) and Dec 2 ½ cents higher ($4.67)
May KC Wheat closes ¾ cent higher ($4.27 ¾), July ½ cent higher ($4.39 ¼) and Dec ¾ cent lower ($4.79 ½)
Weekly Wheat Export Sales – old crop vs. 100-300 K T. expected; new crop vs. 150-350 K T. expected
Highlights of USDA Wheat Supply-Demand Report – US Old Crop – left carryout unchanged – US New Crop – winter wheat production comes in 47 million bu. less than expected; carryout comes in 20 million bu. less than expected – World Old Crop – carryout comes in 3.19 M T. higher than expected – World New Crop – Carryout comes in 12.14 M T. higher than expected
The wheat market did not know what to do on Wednesday. Before the USDA report it was making 8-day lows. After the report it tried to rally only to sell off and challenge the early day’s lows and then some late short covering brought prices back to the plus side for the day. Based on expectations the domestic data, I thought, had a friendly bias. The world data was almost blatantly bearish. I find it interesting that World projected production is down 15.3 M T. yet carryout projections increase year to year. It’s all about the “D” word.
Basis levels for SRW continue to be quiet. Not much is happening with the HRW basis but it is holding on to recent gains. HRW for export continues to firm. Spreads do little in Chgo; fractionally softer. Spreads in KC were fractionally firmer. Given the cutback in US exports spreads will probably stay sloppy looking unless the crop size starts to shrink noticeably.
Two weeks ago the flat price gave us some almost impressive looking reversals suggesting the downside is over. The flat price responded accordingly for a while and then started giving it back. Today’s lows tested some of the recently established interim support and responded with another suggestive upside reversal. I get the impression the spec does not want to give up his short positions but the price action of late (last few weeks) suggests I should be playing this market from the long side on good healthy breaks (unless I’m reading the chart upside down).
TEF – Just My Opinion – May 10th
Daily Support & Resistance for 05/11
July Chgo Wheat: $4.28 – $4.40
July KC Wheat: $4.35 – $4.48
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