Commentary
In my opinion wheat is following along with the recent corn and soybean rally. That said crop condition ratings of Corn, Soybeans, and Minneapolis Spring wheat have worsened though the plunge in Spring wheat ratings may have spurred additional buying. However, with the winter wheat harvest accelerating and the SRW crop being relatively large, this market is likely to lead a price reversal. Markets settled weaker across the board today as wheat was unable to keep its streak of gains alive with corn and beans under pressure. However, Chicago and KC wheat were able to recover late to finish off the lows as buyers are still going with the recent trend. The path of least resistance in my opinion remains to the downside for wheat if corn adds a leg lower especially as we saw Open interest down another 9k contracts in Chicago wheat yesterday as short covering by managed money fund continues. Open Interest is down sharply over the course of June with new longs absent in the wheat market. That said, there is still time for shorts to get squeezed if the rally in soy and corn resumes especially if needed rains miss out in the Midwest. Technical levels for September 23 wheat come in as follows. Support is first at 7.12. A close under and its 6.96, the 200-week moving average. A close under here and its 6.86 and then 6.72. Resistance is 7.49 to 7.54. A close over and its 7.75, then 7.92.
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