Wheat Weekly Comments May 19

Wheat Weekly Comments May 19

Wheat started the week by opening the overnight session mixed with Mpls lower, Chicago steady, and KC higher. By the close of the night session all three exchanges were posting solid gains and pushing higher. Early support continued to come from Friday’s surprisingly bullish Crop Production report. Slow planting progress in the Northern Plains and dry conditions in the western regions of Canada added support. Today’s close in Mpls pushed the Sept above the 67% retracement level. That opens the market up to test the recent high of $9.10. Expectations for this afternoon’s crop Progress report have another decline for the winter wheat conditions and delayed planting progress for spring wheat.

On Tuesday wheat opened the overnight session mixed with Mpls and KC lower while Chicago was higher. By the end of the night session all three wheat exchanges were lower. KC was under pressure from Monday afternoon’s Crop Progress report, which showed a steady crop condition rating. But late session support which managed to push KC into the green on the close came from the early findings from the wheat Quality Tour. Early losses were also kept in check from the lack of progress on the Black Sea Grain Initiative. Talks broke down over the weekend and have not been rescheduled to resume anytime soon. The agreement expires May 18.

Mpls was able to stage a recovery and trade with gains on and off throughout Tuesday’s session with support coming from Monday’s Crop Progress report, which continued to show very slow planting progress. Traders are also concerned that wheat seeding will take a back seat once producers get back in the field as most will concentrate on corn and soybeans. In other words, spring wheat needs to offer an incentive for producers to plant wheat. Ukraine Grain Association is estimating Ukraine’s 2023 wheat production at 17.0 MMT vs 20.2 MMT last year. Tuesday’s performance was more about money flow and risk off than it was about fundamentals. Technically, Mpls is posed to test their recent high of $9.10.

In Wednesday’s session wheat opened the overnight session mixed with KC higher while Mpls and Chicago were lower. By the time the night session was coming to a close all three wheat exchanges were posting solid gains. By the time the day session started all three wheat exchanges were under pressure with selling tied to reports that the BSGI was extended for 60 days. Not that this should pressure the market, as it is nothing new, but the extension combined with reports of planting in the Northern Plains and the heavy selling pressure in corn and soybeans was enough to push wheat lower.

KC was the best performer throughout Wednesday’s session with support coming from the devasting reports from the Wheat Quality Tour. Tuesday’s tour ended up with a day one yield of 29.8 bus, vs 39.5 bus last year. NE’s Wheat commission is estimating NE wheat production at 30.0 MB vs 26.2 MB last year and vs USDA’s projection of 33.0 MB. CO’s Wheat commission is estimating CO’s production at 54.0 MB vs 36.0 MB last year and vs USDA’s latest estimate of 50.0 MB. BAGE is estimating Argentina’s wheat crop at 18.0 MMT vs 12.4 MMT last year and vs USDA’s projection of 19.5 MMT. Planted acreage is now estimated at 15.6 million acres vs 16.6 million previously. Technically Mpls and KC closed in an ok spot, but Chicago is back flirting with contract lows.

Wheat closed sharply lower across the board on Thursday, and for no reason other than the funds wanted to heavily sell wheat today. Margin call selling was part of the reason for the selloff as the past few sessions of lower trading in corn and soybeans has left traders needing to trim positions to pay margin calls, and liquidating long Mpls and KC positions was how they made their margin call.

The wheat Quality tour wrapped up Thursday putting KS’s wheat crop at 178 MB vs USDA’s May estimate of 191 MB and vs 244 MB last year. The yield was estimated at 30 bus vs USDA’s May guess of 29 bus and vs 37 bus last year. Abandonment is estimated at 27% vs 19% average. This will be the smallest wheat crop in KS in 66 years. The OK Wheat Commission is now estimating OK’s wheat crop at 49.5 MB vs 68.6 MB last year. Russian officials are estimating their 2023 wheat production at 78.0 MMT vs 81.5 MMT previously and vs 92.0 MMT last year. Wheat exports continue to disappoint as last week’s pace was negative and so far next year’s pace is estimated at 72 MB vs 101 MB last year at this time. Lowest export pace for this time of year in 18 years.

July Mpls wheat support is at $7.85 while resistance is at $8.50. Sept Mpls support is at $7.80 while resistance is at $8.50.

For the week, July MW was at $8.04 down 42.0 cents, Sept MW was at $8.07 down 41.25 cents, July Chicago was at $6.05 down 30.0 cents, and July KC was at $8.2425 down 52.75 cents.