Wheat Weekly Comments June 7

Wheat Weekly Comments June 7

To start the week KC wheat gapped higher at the start of the overnight session while Mpls and Chicago opened steady to slightly lower. All three wheat exchanges were able to regain composure and rally to post solid gains by midsession. Early support was due to less than expected rain in Russia and from the forecast that is calling for hot and dry conditions to return this week. Light support was also due to rains in the Southern Plains, which at this point is not welcome since wheat harvest has started. The trifecta for support came from another rain system that moved across the Northern Plains overnight, bringing as much as 2 to 5 inches of rain. By mid-session wheat was posting strong gains, but the pressure from the lower soybeans and corn proved to be too much and wheat slowly faded into the red. The selloff in wheat does not seem to be justified with the current fundamentals.

On Tuesday wheat opened the overnight session lower and maintained small losses throughout the night but did see pressure intensify once the day session started. Early selling was tied to Monday afternoon’s Crop Progress report, which showed a much better than expected crop rating for spring wheat (5% above expectations) and from a 1% increase in winter wheat conditions. Losses were kept in check early by slower planting progress than expected for spring wheat. Losses were also kept in check by weather forecasts calling for more rain for the Southern Plains, which is not welcome now that harvest season has started. Spring wheat saw additional selling from forecasts calling for rain to move out of the region and be replaced by warmer drier air. Technically wheat is in a tough spot and is in need of a correction to correct an oversold market condition.

In Wednesday’s session wheat opened the overnight session steady to higher with Chicago higher while Mpls and KC were steady. After trading lower for 6 days in a row, bargain hunter buying was evident. But once the small trader buying dried up at midsession, the funds took charge, pushing wheat through their first level of support. There was friendly news that should have supported wheat today, but the heavy selling pressure overshadowed the news. Sovecon lower Russia’s wheat production estimate to 80.7 MMT vs 82.1 MMT last week. So far, the Russia wheat crop has seen a decrease of almost 25 MMT due to the hot dry conditions, which is expected to continue to plague the country for the next 10 to 14 days. The reduction in production has been enough that numerous imports have been tendering for and buying more wheat to get their needs met.

Expectations that the rest of the nation’s spring wheat will get planted and that winter wheat harvest will advance without weather conditions added pressure late. Rain makes grain. As of Sunday, there was 678,000 acres of spring wheat left to plant. ND has 477,000 of those acres while MN has 32,000 acres left to plant. Last planting date for crop insurance purposes is today, June 5.

On Thursday wheat opened the overnight session higher in all three exchanges but faded its early gains to end the night session higher in Mpls, lower in Chicago, and steady in KC. Early support came from technical buying as well as from spill over strength from the higher corn and soybeans. Gains were kept in check from last week’s disappointing export sales estimate, which was negative. Improving weather conditions added pressure was forecasts are calling for warmer drier conditions, which would help both the spring and winter wheat. The market has continued to ignore Sovecon’s production cut for Russia as this week they cut production to 80.7 MMT vs 82.1 MMT last week.

As of Sunday, there was 678,000 acres of spring wheat left to plant. ND has 477,000 of those acres while MN has 32,000 acres left to plant. Last planting date for crop insurance purposes is today.

Support for July Mpls is at $7.00 while resistance is at $7.65.

For the week, July MW was at $6.945 down 45.25 cents, Sept Mpls was at $7.035 down 46.25 cents, July Chicago was at $6.275 down 51.0 cents, July KC was at $6.6575 down 43.0 cents.