March Chgo Wheat closed 1 cent higher ($5.23 ½), May 1 ¼ cents higher ($5.31) & July 1 ¼ cents higher ($5.38 ¼)
March KC Wheat closed 1 cent higher ($5.09 ½), May ¾ cent higher ($5.20 ¾) & July ¾ cent higher ($5.32 ¼)
Weekly Wheat Export Sales – 313.6 K T. old crop vs. 500-700 K T. expected – no new crop vs. none expected
Egypt announces an overnight tender for optional origin wheat – overnight Egypt buys 120 K T. – 60 K T. Ukraine, 60 K T. Romania – the US had a competitive looking FOB offer but freight was added in they were out of the ball park
Weekly wheat export sales were an extreme disappointment vs. recent sales and inspections. The US gets shut out of any Egyptian business due to high freight out of the US. Despite this bearish looking news US wheat futures were able to stand in on Thursday despite the weakness all around them. The sharply lower US dollar as well as what appears to be higher World prices is the rationale for today’s performance. It should be noted that Russia was shut out of the Egyptian tender as prices were deemed too high. This has some thinking this is part of the process of Russia slowing down its recent pace of sales. Overnight the Russian Ag Ministry will meet with its resident exporters to discuss export targets. A target of anything less than 34.0 M T. will be deemed friendly to US futures and anything over 35.0 M T. will be deemed as negative to US futures.
Toledo ups its bid for SRW. Other SRW locations remain unchanged. Interior HRW cash prices are steady but with I feel an underlying firm bias. The SRW basis at the Gulf jumps higher while the HRW basis at the Gulf is looking soft. Chgo spreads were fractionally soft within the current year – old crop loses to the new crop. Chgo spreads see more volatility vs. KC due to a larger volume of trade. Since mid-November Chgo wheat spreads have looked bad and not followed through as well as looking good and not following through. KC spreads ran fractionally firmer within the crop year – old crop KC gains a bit on the new crop. KC spreads have seen similar direction in the same time frame but not with the volatility. As of this writing both of these markets’ spreads are drifting lower. If you’re a believer that the US is destined for better business the November lows should hold.
All I can say for Thursday’s trade is that the flat price is in a brief holding pattern. I say brief as daily momentum indicators read clearly lower. We can talk about higher World prices and the possibility of Russia slowing down its export pace. None of this will mean anything unless business with the US improves. My bottomline – the path of least resistance is currently lower.
Daily Support & Resistance for 12/21
Mch Chgo Wheat: $5.16 – $5.32
Mch KC Wheat: $5.00 – $5.18
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.