Grain Spreads: KC Wheat Tests Resistance

Sean Lusk General Commentary


There is increased chatter and noise regarding the health of the winter wheat crop, Specifically the hard red winter wheat or KC Crop. Most weather forecasts imply little hope for a significant spring improvement in the KC crop. Several signs point to conditions likely to be at or near record lows when USDA publishes its first Crop Progress Report April 3. It remains to be seen if the market has priced in such conditions or whether poor results will spark a rally. The Black Sea export agreement looks like a done deal in my opinion. The Kremlin today reiterated their government stance of only extending the Black Sea grain deal for 60 days, rather than the previously-agreed-upon 120 days that Ukraine and Turkey are pushing for. The deal expires tomorrow. Short covering rally the last few weeks has been featured as uncertainties abound regarding crop conditions in hard red winter wheat areas, war in Ukraine, and now a potential banking contagion. Technical levels for May KC wheat as follows. Major resistance at the 840/44 area. A close over is needed to push the market to the 888/894 area. Major support isn’t found until 810/8.09. A close under and next support at 800. A close under 8.00, pushes the market to the 7.80/83 area. A close under here and its Katy bar the door to lows not seen since the Fall of 2021 in my opinion. Weekly Chart attached. No trade recs into the weekend. 

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