Commentary
Wheat rallied yesterday on zero fundamentals and pulled back on an improved US crop situation today. Good to excellent ratings improved 3 points when the Trade was expecting a steady number. At 50% Good to excellent the crop is 4% better than average. US winter plantings are 90% complete vs 89% average. Emergence is also better than average with 75% vs 73% average. Export inspections yesterday were the lowest in 20 years, coming in at 71.608 metric tons. This is well below the pace needed to hit USDA’s target at 274K. 2023 for wheat has been a trend of weak exports versus supply side fears out of the Black Sea. It’s been “sell the rumor and buy the fact” in my opinion. One of the problems that stymies domestic prices, is that when US origin rallies, Russia and Ukraine fail to follow. That eventually makes US origin uncompetitive on rallies. Similar to corn, wheat lacks a story. Aside from funds rolling out of Dec contracts well prior to first notice, I’m not seeing much here and am looking for clues to determine if an aggressive short covering will take place. Absent of something entering the market, look for funds to continue to defend their short positions in my opinion. No trade recs yet.
Trade Ideas
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Risk/Reward
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Sean Lusk
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