Commentary
US weather forecasts saw little change with wetter conditions in Central Iowa into Illinois and Indiana in the 1 to 5 day forecast. However forecast runs have mostly hot and dry conditions across Western Kansas and Colorado, and the N Plains. It is my belief that the Minneapolis wheat or Spring wheat will continue to lead the complex higher as yields are going backward in a hurry with little relief seen over the coming weeks. Globally drought like conditions continues to be an issue in Western Russian spring wheat areas with above normal temps over the next 2 weeks that could potentially affect yields. The heat and dryness in Canada may decrease spring wheat output there. In short we have some trouble spots in my view, and futures prices are reflecting that worry. September 21 Minneapolis wheat hit a high of $8.06 today setting back slightly into the close at 8.02. The September contract is still 43 cents away from contract highs and without moisture soon I think a new high may be seen hitting the trend line on the chart at 8.71. A close above that we could see 9.00 and beyond. So far the $8 mark has been an area that has seen the buying diminish and sellers emerge. This potentially tells me that if the market gets some threats of storms in the Dakotas, this market could pull back 60 cents quickly. So far though breaks have been buying opportunities recently here and should continue to be just that if conditions don’t improve into July. A rally another dollar higher could pull the higher protein KC wheat higher than Chicago wheat. A lot of “ifs” and “maybe’s” here but if we have a short Spring wheat crop at home and in Eastern Europe, the KC and Chicago wheat are likely to get a lift and to a lesser extent Corn in my opinion. The crop condition report released Monday night for good to excellent condition for Spring wheat came in at 27 percent good to excellent versus 37 percent last week and over 70 percent last year. These ratings are very subjective and with a change in the weather,(i.e. increased rain chances) can improve the crop ratings dramatically in the weeks ahead. Caution is urged here given the volatility, but we have some option ideas and strategies for one to consider. Call or email me at anytime.
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