Wheat Weekly Comments May 26

Wheat Weekly Comments May 26

To start the week, wheat opened the overnight session higher but reversed to trade lower by the close of the overnight session. Early selling was tied to reports of more imports of wheat into the US as well as from expectations that the afternoon’s Crop Progress report will show solid planting progress for spring wheat last week. In world news, SovEcon is estimating Russia’s wheat production at 88 MMT up 1.2 MMT from last month. Wheat was able to recover and trade mixed throughout the day session with support coming from weather forecasts calling for more rain for the Northern Plains, which if realized would likely result in an end of wheat’s planting season. As of May 15, Canada was estimating wheat planting progress at 38% vs 0% last week and vs 50% last year. Technically, Monday’s higher close was significant, but it will take two days of like activity to change the trend.

On Tuesday wheat opened the overnight session mixed with Mpls steady, Chicago higher and KC lower. But all three exchanges faded and were trading with losses by early morning. Trading was wild overnight as all three wheat exchanges had wide trading margins between 13 to 18 cents. That volatility continued to drive the wheat exchanges in the day session. Technical buying was the cause of some of the support, but some was also due to Monday afternoon’s Crop Progress report. The report put spring wheat planting progress at 64% vs 40% last week and 73% average. The fact that ND has only 48% of its spring wheat planted vs 65% average helped to push spring wheat higher. Last planting date for spring wheat for insurance purposes is between May 31 and June 5. So, it is likely not all of the intended spring wheat acreage will be planted. Gains were kept in check from reports out of the EU stating the US has bought 210 TMT of EU wheat so far this year. Five cargos are expected to be out of Poland and 2 cargos out of Germany. Light support as also due to another change in the weather forecast, this time the rain was pulled out of the Northern Plains as now hot dry conditions are expected for the next 15 days, with only slim chances for rain.

In Wednesday’s session wheat opened the overnight session mixed with Mpls steady while the winter wheat contracts started lower. Early selling was tied to continued pressure from the reports that the US was importing wheat from Poland and Germany. The selling pressure was enough to push wheat lower hitting sell stops which accelerated session losses. Light selling was also tied to forecasts calling for drier conditions in the Northern Plains (which will aid planting) as well as from forecasts calling for rain in the Southern Plains (which is expected to help winter wheat) and from reports that the Canadian prairies had received much needed rains. In reality, Wednesday’s losses in wheat are hard to explain as there does not appear to be a reason for wheat to have fallen back toward the low end of its trading range.

On Thursday wheat opened the overnight session higher but faded to post losses by the time the night session was coming to a close. Early selling was tied to poor demand as wheat exports were negative for the second week in a row. Technical buying did step in once the day session started which helped push Mpls and KC into the black but only helped Chicago trim losses. Mpls was also supported by planting concerns as it appears that the Northern Plains weather will prevent producers from being able to plant all of the wheat acres that were intended to be planted in the March intentions estimate. KC was also supported by poor conditions and the likelihood that the crop will continue to decline. On the negative side, Russia and China have entered into a trade agreement. But on the positive side, Russian has forced the closure of one of Ukraine’s ports.

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 $8.18 up 14.0 cents, Sept MW was at $8.1925 up 12.25 cents, July Chicago was at $6.16 up 11.0 cents, and July KC was at $8.1925 down 5.0 cents.