Grain Spreads: Wheat Potentials
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Commentary
The wheat market saw some minor strength this morning but is still well within last week's range after a 5th consecutive lower weekly close. Market action has been disappointing in my opinion as the bean and corn push higher has not translated into much support for wheat but that could change if the market is able to push above last week's highs. COT data showed Managed Money added to their net short position, which stands at 150,000 Chicago and KC combined. Technical action has not given funds a reason to aggressively short cover. Part of the pressure is coming from more aggressive Russian exports with SovEcon estimating August exports of 4 million tonnes, up from 2 million in July, and significant precipitation on tap for the southern Plains this week. From a demand standpoint, the market is slowly receiving some bullish inputs. US wheat shipments via the export inspections report came in at 34.8 million bushels, well above the 13–20-million-bushel range of estimates and the highest weekly figure the market has seen in years. We are nearly one quarter through the 25/26 marketing year, and shipments currently sit about 11% higher than year ago levels, while the USDA projects a year-on-year increase of about 6%. Technically, December wheat is most actively traded for both Chicago and KC. Support for December Chicago wheat is 526/524. Underneath these levels, 5.17, then 4.97. Resistance is 542, closes above and the market could retest 555 and then 564.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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