Grain Spreads: Wheat Strength

Wheat - Field of wheat


Wheat continues to find support from declining production estimates from Russia, while the Ukraine crop is now under stress as well. IKAR, which is the Russian version of the USDA cut its forecast for Russia’s wheat crop another 2.5 MMT to 83.5 MMT after a “more exact assessment of frost damage and dryness across the south.” Total grain production is now forecast at 132 MMT, down 3 MMT from its prior outlook. The recent freeze damage created the noise and as a result the short covering by managed money, but drought maybe the biggest culprit as crop scouts have stated that moisture deficits to date have reduced production potential across southern Russia, and now the eastern three-fourths of Ukraine’s wheat belt. Furthermore, excessive rains are delaying planting of Russia’s spring wheat crop, which typically makes up nearly a third of its production, raising concerns of losses there as well. There may also be fears that the new Russian offensive could reduce fieldwork in affected areas and reduce overall production. Chicago open interest gained 8K contracts while KC wheat gained 4K. There isn’t much relief in sight for drought-stricken areas in Eastern Europe in the next week to ten days. My opinion is that breaks should be well supported. The next targets tot the upside are these three levels. Resistance is 715, the 200-week moving average, then 721, which is 15% higher on year. We close above these levels, I think funds push this to 7.52, 200 percent higher on the year. Support is at the 100-week moving average at 6.84. A close below and the market could retest 6.59 and the weekly low at 6.54. 

Trade Ideas






Please join me for a free grain and livestock webinar 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 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

On the date of publication, Sean Lusk did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.