Wheat Weekly Comments

Wheat Weekly Comments

Wheat started the week by opening higher across the board but slipped into the red by the end of the night session. Early support came from technical buying. Wheat is oversold and in need of a correction. Wheat has become uncompetitive against the other grains and if wheat wants to hold onto acreage, it needs to give producers an incentive to not destroy planted acreage. The morning’s export inspections estimate was negative wheat as it was at the bottom of expectations and at a 9-year low and below the pace needed to make USDA projections. Wheat was able to recover and trade with solid gains during the day session with most of the early support coming from concerns that the Black Sea Export Initiative may not be extended.

In Tuesday’s session the wheat markets saw small gains for most of the overnight session but added to the gains throughout the day session to close with strong gains. Support came forecasts that showed little rain for the HRW belt for the coming week. Support also came from Monday afternoon’s crop progress reports that showed another week of deteriorating conditions for winter wheat in TX and OK while KS held steady. Russia announced the Black Sea Grain Initiative has been extended for another 60 days as both sides continue negotiations (the original deal was set to expire on March 18).

The wheat markets all closed with small gains on Wednesday. Light support came from uncertainty regarding the Black See Grain Initiative as Russia announced a 60-day extension which was then rejected by Ukraine. Cool temps and little rain over the next 7 days in the US Southern Plains added support. But gains were limited by the sharply higher US dollar (up over 1 cent today).

On Thursday wheat opened the overnight session mixed with Chicago higher while KC and MW started in the red. Early pressure came from last week’s disappointing export sales report even though the numbers came in within expectations. Light pressure came from concerns from uncertainty on the Black Sea Initiative. Talks have stalled as Russia is looking for the agreement to be extended 60 days while Ukraine and Turkey are hoping for a minimum 120-day extension. Losses were kept in check from weather forecasts calling for dry conditions for much of the Southern Plains for the next week.

Allendale’s acreage survey has all wheat acreage at 48.7 million vs 49.5 million in Feb and vs 45.7 million last year. Winter wheat acreage is estimated at 36.5 million vs 36.95 million in January. Other spring wheat acreage is estimated at 10.6 million vs 10.8 million last year. Durum acreage is estimated at 1.57 million vs 1.63 million last year.

May Mpls wheat support is at $8.50 while resistance is at $9.50. Sept Mpls support is at $8.25 while resistance is at $9.50.

As of March 12, the following states reported crop rating and crop progress levels for winter wheat. CO: 40% g/e, up 11% from the previous report, 11% pastured vs 0% last week and 0% average. KS: 17% g/e, unchanged from the previous week. OK:30% g/e down 9% from the previous week, jointing at 12% vs 3% last week and 10% average. TX: 17% g/e down 2% from the previous week, headed at 21% vs 19% last week and 11% average.

For the week, May MW was at $8.6075 up 36.25 cents, Sept MW was at $8.55 up 35.0 cents, May Chicago was at $7.105 up 31.25 cents, and May KC was at $8.3575 up 37.5 cents.