Wheat Weekly Comments May 3

Wheat Weekly Comments May 3

To start the week wheat opened the overnight session lower and sold off hard early in the night, pushing most wheat contracts to post double digit losses early. Mpls and KC were able to shake off the heavy selling pressure, but Chicago could not. Early selling was tied to weather forecasts calling for rain for the Black Sea. KC and Mpls were also supported by weather but for different reasons. KC remains dry while the Northern Plains are wet. Expectations this afternoon’s Crop Progress report will show decent planting progress limited the gains in Mpls while expectations of lower crop ratings supported KC. Chicago was also pressured by news that the Japanese yen has slipped to be at its weakest value to the US dollar in 34 years. Spreading and position squaring ahead of month end added to today’s activity.

On Tuesday wheat opened the overnight session lower and advanced selling pressure throughout the night session. Mpls trimmed its losses slightly once the day session started, but the winter wheat exchanges extended session losses. Early selling was tied to weather forecasts calling for rain to return to the Plains Tuesday afternoon and from forecasts calling for continued chances for rain in the Southern Plains for the rest of the week. The winter wheat exchanges saw selling expand once the day session started with selling tied to the 6 to 10 day forecast for Russia, which is calling for rain. Mpls was able to trim its losses by midsession due to the forecasts calling for rain as if the current forecast holds, it has the potential to keep producers in the Northern Plains out of the fields through the middle of May. Technical selling was also evident as all three exchanges test major resistance. Monday’s Crop Progress report showing a 1% drop in ratings and last week’s aggressive planting progress for spring wheat added selling pressure.

In Wednesday’s session wheat opened the overnight session mixed with Mpls and KC lower while Chicago was higher. By the end of the night session Chicago had extended its gains while Mpls and KC had extended their losses. Once the day session got under way, all three wheat exchanges were trading in the red, with KC the worst performer while Chicago and KC held close to steady. Eary selling was tied to an updated weather forecasts that is now showing a lightly better chance for southwest KS to possible see some rain this weekend. Losses were kept in check from lack of confidence in weather forecasts calling for a drier pattern for the US Northern Plains and for rain for Russia.

On Thursday wheat opened the overnight session mixed with KC firm while Chicago and Mpls opened lower. By the time the night session was ending all three wheat exchanges were posting gains, which the winter wheat exchanges were posting double digit gains. Early selling pressure spilled over from Wednesday’s lower session and from ideas that today’s export sales pace could be disappointing. Light selling pressure also was tied to weather forecasts calling for better chances for rain in the Southern Plains later next week, with some even expected to move into the southwestern corner of KS. But updated weather forecasts could not confirm the rain for KS and now even weather forecasts for Russia are pulling out the coverage and lower amounts. Light support was also due to reports Russia stage another round of heavy attacks on Odessa, the third attack for the week. Mpls continues to see support from expectations planting progress will be delayed until the middle of May, especially if current weather forecasts are realized.

There are about 2 weeks left in the seasonal tendency for wheat to rally. Continue to target $7.35 July to advance sales.

Support for July Mpls is at $6.35 while resistance is at $7.35.

For the week, July MW was at $7.145 up 11.0 cents, Sept Mpls was at $7.195 up 9.5 cents, July Chicago was at $6.225 up 0.25 cent, July KC was at $6.5025 down 4.0 cents.

For the month, July MW was up 51.25 cents, Sept Mpls was up 48.75 cents, July Chicago was up 27.5 cent, July KC was up 55.5 cents.