Commentary
May KC wheat saw a combination of speculative buying and fund short covering today as KC wheat rallied 17 cents in the most active traded contract, while the other wheat classes finished up 1 penny. The extent of today’s rally is not known in my opinion but given that 90 percent of our pricing influence is weather in my opinion, hot dry weather is the reason in my view. Forecasts in the Southern plains already plagued by dryness are not forecasted to see any relief in the next two weeks. This is especially true in central and western Kansas, our number one winter wheat producer. Sustaining wheat rallies could be a bridge to far, so I think it’s important to watch the technical levels here. Weekly continuous chart below. In my view the export market remains a barrier to bullishness with Russian offers unchanged today and no increase in demand for US origin. It is my belief that it will only take one or two rains to help revive the wheat crop where it’s needed most, but as the market has had little weather issues all year, it would be ironic to see one pop up during an important phase of production. We also have a WASDE report tomorrow. The average trade guess is 690 million bushels for all wheat ending stocks. The range is 670 to 720 million bushels. Technically for the uptrend to continue this week, the market needs to hold the trendline just below todays close at 585. A failure here and the market quickly retests 5.78 (ten percent down for year), and then major support at 5.68. A close under 5.68 this week and its katy bar the door to 5.44 and then 5.31. Key resistance is up at 6.06 (21 week moving average) and 6.10. A close over 6.10 is needed to challenge trendline resistance at 6.24 and then unchanged for the year at 6.42.
Trade Ideas
Futures-N/A
Options-N/A
Risk/Reward
Futures-N/A
Options-N/A
Please join me for a free grain webinar every Thursday at 3pm Central. We discuss supply, demand, weather, and the charts. Sign Up Now
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
53 W Jackson Suite 750
Chicago, Il 60604