Commentary
The winter break saw national winter wheat condition ratings fall by six points, from 34% to 28% good/excellent. The numbers match the five-year average winter decline, and it does leave ratings only two points behind last year, but that’s still the lowest initial spring figure since 1996 (and only a point off that record low). Major producer Kansas fell five points to just 16% g/ex, with Oklahoma down the same amount to 26% g/ex, while TX fell 3% to 21% g/ex. Louis Dreyfus is the latest trading firm to cease exporting Russian grain, also starting on July 1, following Cargill and Viterra last week. With some bullish inputs in my view in the last two weeks, we have seen overnight, and weekend rallies sold into during day sessions in both Kc and Chicago wheat. That type of technical action is bearish in my view. Managed funds seem comfortably short at approximately 95K contracts short in Chicago wheat. Weekly export inspections saw a sharp drop from last week with totals of just 6.2M bushels which fell well short of estimates ranging 11-16 Million bushels. Demand for US origin is just not showing up either in my view. This includes sales for future shipment or inspections. Therefore, when these supply side rallies run out of steam and get priced in the market in my opinion, the demand isn’t there to support the market. That’s nothing new however as cheaper origins, (EU, Eastern Europe, and Russia) are cheaper than US origin and usually is the norm. For wheat to trade significantly higher in the next months, it may require in my view a rally in the Minneapolis Spring wheat contract on late plantings and low acres, and perhaps a cessation of exports through the Black Sea that’s set to expire in May following the 60-day extension in Mid-March. May wheat is still the most actively traded contracts. Support through next week comes in first at the 200-week moving average at 6.88. A close under and its 6.73, which represents 15 percent lower on the year. A close under and its 6.69 or bottom edge of the Bollinger band. A close under all 3 support levels and its katy bar the door to 6.33. Resistance is at 7.01 and then 7.12. A close over 7.12 and its 7.30 then 7.52/57. Trade the charts!
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