Commentary
Russia’s announced plans to cut its crude oil exports and complaints about the U.N. deal allowing Ukrainian grain exports gave the wheat market a boost to finish the week in my opinion. Russia’s ambassador to the United Nations said today that Moscow has not been able to export any grain as a part of the Black Sea grain deal struck between Russia and Ukraine last year due to Western obstacles. In short, a lot of noise in the market heading into the weekend. The rally began overnight as news that Russia had launched a large attack on Ukrainian infrastructure with cruise missiles and reports were seen that some of the missiles crossed over Moldavian and Romanian airspace on the way to the Ukraine. Paris futures rallied as did US exchanges overnight on the news maybe reminding traders what can happen if trade is potentially disrupted through the Black Sea. While this hasn’t happened yet, any threats of such action, even at these elevated prices, will send the shorts scurrying to cover amid the continued unrest in my opinion. Due to technical problems from the CFTC, the market is absent of up-to-date commitment of trader data showing net managed positions among the other categories. The last reported position showed managed money short approximately 60K contracts. Given the sideways action and choppy trading in wheat the last two weeks, it’s my belief that the rally today can most likely be attributed to short covering. Keep in mind demand is still week for US origin while crop conditions in hard red winter areas look to get a decent amount of moisture should forecasts verify in Oklahoma and eastern Kansas. The U.S. dollar above par is still providing headwinds for U.S. wheat export problems. Headline driven rally today, a close over 794 basis March futures is needed to challenge next resistance in Chicago wheat at 8.30. A close under 7.63 basis March 23 futures and the next lever down is 7.44 in my opinion.
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