Commentary
July SRW wheat rose 53 cents to $10.93 and July HRW wheat rose 49 cents to $11.70, both near session highs. July spring wheat rose 38 3/4 cents $12.30 1/2. Wheat futures extended an overnight rally sparked by doubts over a potential agreement to resume Ukrainian wheat shipments, with delayed planting in the U.S. Northern Plains also lending support. Ukrainian President Zelensky said that the country has 22-25 MMT of grain currently stuck in storage with that number rising as high at 75 MMT by the fall; they are discussing export corridors with the U.K. and Turkey and looking for anti-ship weapons, along with more weapons quickly from the West. Zelensky also said that Ukraine is “not ready” to export its grain via rail through Belarus, shutting down that alternative option for the time being. I attached a weekly KC wheat chart. Should we take out trendline (designated by blue arrow) this week, I think this market possibly moves up to 1245/1250 quickly. This assumes no deal to move any amount of grain out of the Ukraine to Turkey. That level is approximately halfway back from the recent high three weeks ago at 1379 to last week’s low at 1112.4. Fifty percent retracement is 1245. In lieu of buying the Board, which carries major risk, a trade to consider would be selling a put spread in my opinion.
Trade Ideas
Futures-N/A
Options- sell the September KC Wheat 1350/1250 put spread at 80 cents OB.
Risk/Reward
Futures-N/A
Options-Risk 10 cents upon entry, if filled at 80 cents, place a GTC buy stop at 90 cents on the spread which risks $500.00 plus fees.
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