Commentary
Wheat prices are finally finding some support on colder temps in the plains while the aggressive attacks by Russia and Ukraine against each other have given the edge to the bull camp so far this week. The bigger news overnight was the EU announcing it was crafting some sort of tariff against Russian grain imports, and possibly against oilseed imports too. By most accounts, this may restrict 1.5 million metric tons of grain from Russia. The headlines had more impact on the futures than the reality of a tariffed 1.5 million metric tons of grain would in my opinion.
Chicago wheat led the complex higher with the nearby May contract settling right below the 20-day moving average of $5.55. The funds are holding an approximate 80k short, but price action suggests a close above last week’s highs of $5.56 would lead to a move towards the $5.85 mark. May KC wheat did close above the $20-day at $5.78 with the 50-day of $5.97 and recent $6.05 highs as next upside targets potentially. Caution is warranted on further upside here. Funds have defended their positions on rallies, but that doesn’t mean the market can’t run another 25 to 30 cents higher prior to another wave of selling. Wheat and corn shorts have been looking for any reasons to exit after sizable breaks the last few months and have some tidbits here. Problem is it’s not enough to prod them into building a net long in my opinion.
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