Commentary
The trade in my view is being a little overly optimistic about the condition of this year’s spring wheat crop. USDA sliced another four points off the amount of crop rated G/E, with just 16% of the crop now falling in the top two categories versus analysts’ expectations for a 19% G/E rating on average. That’s still above 1988 when 7% of the crop was rated G/E, but in my view it’s a weak comparison. Of particular note, the amount of crop rated P/VP jumped 11 points to 50%, as continued dry weather and heat whittled crop prospects. Some rains fell on the Northern Plains this weekend and more rain is possible this week, but the moisture won’t do much good at this point in my opinion. USDA reports 69% of the crop was headed as of Sunday, a 21-point gain from the week prior and seven points ahead of average, with dry weather accelerating crop development. I included a Daily September Minneapolis wheat chart. If we go back to hot and dry the second half of July we have the potential to trade over 9.00 and even challenge the 10 year highs made in 2011/2012 at 10.00 in my opinion. First though we have near term resistance at 8.19 /8.20. Above that level we have the gap from Tuesday’s collapse at 8.26. In my those levels need to be surpassed and settled above to make a run for the recent highs. From a percentage basis 50 percent higher for year is at 9.00 and 60 percent higher at 9.60. Key support in my view is at 7.80. If that can’t hold we could see a move down to 7.35 in my opinion.
Trade Idea
Futures-N/A
Options-N/A
Risk/Reward
Futures-N/A
Options-N/A
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