It is my belief that winter wheat futures overnight hit the highest levels in 2 1/2 months on concerns an intensifying Russia-Ukraine war will disrupt grain shipments from the Black Sea region. Prices turned lower early in daytime trade but have firmed again, though they are well off their overnight highs. In my view Ukraine’s exports through its Southern export terminals are at potential risk as Putin prepares to escalate the war. That said grain is still moving, largely over its western border via rail. Nine percent of Ukraine’s winter crops have been planted thus far, versus its intended acreage. It’s 2023 wheat production is expected to fall to 16 – 18 million metric tons, down from 19.2 million metric tons (mmt) in the current year, and down from 33.0 mmt in the previous year. I attached a March Chicago Wheat/Corn futures spread. We have seen this spread rally 80 cents off the lows. That comes after a $3.14 cent break. I would like to determine if this is a bounce from an oversold situation or the start of a move higher towards the 50 percent retracement level perhaps. With less wheat planted in Ukraine for 22/23 and crop problems elsewhere for wheat (Argentina), amid US corn harvest, maybe there is a story here in the long run. Trading this spread carries unlimited risk, so depending on one’s risk profile, the mini contracts may be the play here, given reduced margin and staying power. No trade recommendations today.
Please join me for a free grain and livestock webinar every Thursday at 3pm Central. We discuss supply, demand, weather, and the charts. Sign Up Now
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 not 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.
Vice President Commercial Hedging Division
312 957 8103
888 391 7894 toll free
312 256 0109 fax
53 W Jackson Suite 750
Chicago, Il 60604