Commentary
Markets finished lower across the board with KC leading the way followed by Chicago and then Minneapolis. Values traded lower from both the overnight open and day session open with little if any strength seen at all with algos selling it all the way down. The price action just continues to reinforce the idea that nobody cares right now with basis and spreads weakening. In my opinion, the lack of buying interest is pushing futures lower thus making end-users sit on their hands waiting to buy when the market shows some semblance of turning higher.
The wheat complex has now broken down technically with new lows being put in for all classes today. December Chicago wheat took out and closed below the 05/31 lows of $6.08 ¼ with the selling gaining steam once this level was taken out. Managed funds may have added another 10K shorts today putting their net Chicago wheat short at 94K contracts in my opinion. Technical levels through next week come in as follows. Support is 592, which represents 25% lower for year. A close below it in my view could push the market to bottom edge of Bollinger band at 578. If those levels don’t hold, look for the market to challenge 554 (trendline) and 552 which is 30% down for year. Resistance is at 632, the 20 percent down threshold and with a close above, last week’s high at 646, and then 651. To turn bullish, market has to close above last week’s high (646) to make a run for 674, 679, and 689, which are three key resistances way up the page. See weekly continuous chart below. No trade recs in this report
Trade Ideas
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Risk/Reward
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Sean Lusk
Vice President Commercial Hedging Division
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