Wheat Commentary
Sept Chgo Wheat closed 3 ¾ cents higher ($4.94 ½), Dec 3 ¼ cents higher ($4.94 ¾) & March 3 ¼ cents higher ($5.03 ¾)
Sept KC Wheat closed 5 cents higher ($4.26 ¾), Dec 4 ½ cents higher ($4.43 ¼) & March 4 ¼ cents higher ($4.59 ¾)
Sept Mpls Wheat closed 2 ¼ cents lower ($5.24 ½), Dec 1 ½ cents higher ($5.36 ¼) & March ½ cent higher ($5.49 ¼)
Weekly Wheat Export Inspections – 395.1 K T. vs. 350-500 K T. expected
Weekly Winter Wheat Progress – Harvested – 82% vs. 84% expected vs. 92% 5-year average
Weekly Spring Wheat Condition & Progress – 73% GE (unch) vs. 72% expected vs. 74% year ago – Harvested – 2% vs. 6% expected vs. 14% 5-year average
Egypt announces an overnight tender for optional origin wheat
In the early going flat price wheat futures were almost as bearish looking as they were bullish looking on Friday. As futures neared the Friday lows the selling abated and short covering ensued. Bull spreading in Chgo led the Friday rally. During the break today the spreads eased but by the end the day the bull spreads saw minor gains. I have to think the bull spreading in Chgo is about quality concerns. I remain suspect of US wheat futures doing any substantial on the upside as wheat prices elsewhere in the world continue to dog it. Tonight’s Egyptian tender should offer some clue as to just where US prices are vs. the rest of the World’s export players. In the past high freight rates out of the US kept us out of the ballgame. I’m thinking that should be the case once again.
Advertised cash wheat prices for standard protein don’t do a whole lot. Parts of Oklahoma are seeing some easing with their basis due to the producer sitting on a fair amount of recently harvested wheat. The elevator/end-user appears to be a playing a cat-and-mouse game with him. The Gulf bid for HRW firms ever so slightly while not much happens with the SRW Gulf bid. KC spreads firmed with the flat price buying while Chgo bull spreading eased early but firmed late. As far as I’m concerned this has to be a quality play for SRW. It will get even more interesting as we approach August month end.
After today supportive looking flat price trade wheat prices appear to be in line to do some testing of recently established resistance. In the Sept KC that starts in the low to mid $4.30’s. In Sept Chgo that starts in the low to mid $5.00’s. As I mentioned last week it is my thought US wheat futures will eventually move into a sideways mode similar to what we saw develop last year following its summer break. This year we’re running about one month ahead of last year’s similar price action.
Daily Support & Resistance for 08/06
Sept Chgo Wheat: $4.85 – $5.00
Sept KC Wheat: $4.20 – $4.32
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.