July Chgo Wheat closed 16 ¾ cents higher ($5.19 ¾), Sept 16 ¼ cents higher ($5.26) & Dec 15 ½ cents higher ($5.38 ¾)
July KC Wheat closed 13 ¾ cents higher ($4.86 ¾), Sept 14 cents higher ($4.98 ¾) & Dec 13 ¼ cents higher ($5.18 ½)
July Mpls Wheat closed 11 ½ cents higher ($5.63 ½), Sept 11 ¾ cents higher ($5.72 ¾) & Dec 11 ¾ cents higher ($5.84 ¼)
Weekly Wheat Export Inspections – 592.7 K T. vs. 400-600 K T. expected
Weekly Winter Wheat Condition & Progress – 64% GE (+3%) vs. 59% expected vs. % year ago – Headed – 76% vs. 84% 5-year average
Weekly Spring Wheat Condition & Progress – 83% GE vs. 60% expected vs. 70% year ago – Planted – 93% vs. 93% expected vs. 96% 5-year average – Emerged – 69% vs. 84% 5-year average
We have a new leader in the clubhouse – it’s called wheat. After steady openings Sunday night wheat prices rallied sharply cued on by quality concerns for the developing US winter crop (both HRW & SRW) and “hot & dry” areas popping up in southern Russia and southern Ukraine. I had been hearing of these developing dry concerns over the past week or so but they finally made it to the media today. What is being impacted is the developing winter crop. SovEcon over the weekend did lower the Russian wheat crop by almost 2.0 M T. but did suggest losses could increase if the current “hot & dry” persists. Initially KC was the upside leader but after their attempt to sell-off mid-morning Chgo started to run hand in hand. Since early last week KC had gained over 20 cents vs. Chgo.
I’m not seeing any changes in the advertised basis for standard protein wheat. It appears Gulf levels also are status quo. Chgo and KC spreads were both firm reflecting the fund buying/short covering. A big question to be answered; If the quality concerns over our new crop are indeed legitimate will it create a squeeze play for the July contracts? By mid-month we should have a better handle on this possible scenario.
Last week I suggested July KC wheat need to rally to the $5.00 level to experience the same kind of resistance the July Chgo contract is experiencing in the mid-low $5.20’s. Today July KC traded to $4.95 and backed off. July Chgo is still experiencing its suspected resistance in the mid-low $5.20’s. Since I believe the situation in southern Russia and southern Ukraine to be the bigger issue vs. US quality concerns all eyes will be watching their forecasts. Price charts show we are honoring suspected resistance levels but each hard sell-off attempt, so far, has not produced any follow through selling. As long as we have this unknown to the US winter crop (quality) and the new concerns over the Russian crop prices will be biased to move higher until these concerns are addressed.
Daily Support & Resistance for 06/04
July Chgo Wheat: $5.00 – $5.32
July KC Wheat: $4.70 – $5.00
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.