Please join me for a free grain webinar every Thursday at 3pm Central. We discuss supply, demand, weather, and the charts. Sign Up Now
Commentary
Wheat has garnered much attention and has seen a tremendous amount of short covering in the last two weeks as managed money has covered approximately 60 to 70k Chicago wheat shorts in that time. Geo-political headlines have driven funds to flip long KC wheat in my opinion. The war with Iran brings headline after headline with some valid and others merely clickbait or not the whole story. For example, the following headline may seem bullish, but after reading carefully would in my view lean bearish. Headline: Reuters news reported that Russian grain exports to Iran stalled after the U.S.-Israeli airstrikes last weekend. Wheat opened higher on the news Sunday night once announced. However, a deeper dive into the story would find that most of the grain has reported already been moved. Russian exporters have shipped 1.9 MMT of wheat this season out of a planned 2.0-2.2 MMT, with total grain exports from July-Feb already at “almost 6 MMT”, up from 3.0 MMT over the same span last season. Bull headline, bearish story in my view. Lots of confusion and misinformation. Domestically, state by State condition ratings showed a number of states posted declines, especially Colorado, which fell 18 points from the beginning of January. Oklahoma and Kansas felt lesser amounts with 4- and 3-point cuts, respectively. Texas has a very low G/E rating at 16%, but it’s 3% better than a month ago. The weather forecast remains steadfast in its beneficial moisture outlook through mid-March. The only areas expected to miss much of the rain are western KS and CO. Both are key producing states, but the season is far from unsalvageable. Wheat after all is a weed and can reemerge fast with beneficial weather albeit for a short time. KC seems to be a more attractive bet than Chicago due to potential weather concerns moving forward given where conditions stand now. Spread Chart below, July KC vs. July Chicago wheat
Trade Idea
Futures-N/A
Options-N/A
If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now
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
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.