Grain Spreads: Wheat Repeat
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Commentary
Wheat markets started out the month on a negative note with US markets catching up to the EU trade that saw a lower close and new contract low for Paris Dec wheat as the US complex was closed for the Labor Day holiday. Wheat ended under pressure in both Chicago and Kansas City but held last week's lows. Weak Russian prices, down $5 this week, and reduced demand from Egypt, along with higher Australian crop estimates are all weighing on prices. Recent upside reversals in both Chicago and Kansas City are still holding and until those lows are taken out, the bull camp can hang on to some hope weakness will lure in technical buyers in my view. Weekly export inspections good again this week at 29.5 million bushels which topped upper end of estimates ranging 9 million to 25 million bushels. The number was lower than last week's 37.5 million though. Support needs to hold 5.24 to 5.20 on breaks. Failure to do so may result in a test of the 5.09 area and if that doesn’t hold 4.97, which represents 10% down for the year. Key resistance isn't seen until 5.40. Next level higher sits at 5.48 and 5.51 and 5.56. This market needs a story to sustain some upside momentum, or else it will be regulated to get pulled by corn and beans in either direction near term in my opinion.
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Sean Lusk
Vice President Commercial Hedging Division
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