Commentary
The wheat market settled sharply lower today as risk-off was seen across the global financial markets today with the weakness in equities setting the tone. Ever bigger Russian wheat crop estimates, wetter Southern Plains forecasts, and a realization the Indian wheat ban its as originally proffered. Sovecon raised the Russian wheat crop estimate for 22/23 to 88.6 million metric tons. IKAR estimates the crop at 85 million metric tons. Both are above the USDA at 80 million metric tons. Talks are also ongoing on trying to restore exports out of Ukraine and fertilizer shipments out of Russia, which in my view would be negative for wheat with more supplies available to the market. That is a big if currently with lots of “ifs “ and maybe’s” in my view. Offsetting some of the potential bearish news out of the Eastern Europe, crop scouts pegged the EU wheat crop at 130 million metric tons with exports of 30 million vs USDA estimates of 136.5 million and 36 million for exports.
Friday is option expiration for the June options contract, so I wouldn’t be surprised to see the market trade down to the weekly gaps on the charts at 12.00 in Chicago and 12.98 in KC made Sunday night. Following that I have no new trade recommendations at this point. In the U.S., drought continues to stress the winter wheat crop, while spring wheat planting remains behind schedule. Crop scouts on day one of the Wheat Quality Council HRW tour found an average yield of 39.5 bu. per acre in northern Kansas. That’s down from 59.2 bu. in that area last year and compares to a five-year average of 46.9 bu. Last week’s USDA report pegged Kansas with an average yield at 39 BPA, so far the tour is right in line with USDA but it sonly day 1.
Trade Ideas
Futures-N/A
Options-N/A
Risk/Reward
Futures-N/A
Options-N/A
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.
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
53 W Jackson Suite 750
Chicago, Il 60604