Wheat Weekly Comments Sept. 15

Wheat Weekly Comments Sept. 15

To start the week wheat opened the overnight session mixed with the winter wheat exchanges higher while MW was lower. Early support for the winter wheat exchanges came from reports of another escalation in the Ukraine Russian war. MW was pressured by expectations that this afternoon’s Crop Progress report will show spring wheat harvest nearing completion. By the time the night session came to a close all three exchanges were lower with selling tied to improving weather conditions in the Southern Plains as well as from expectations that USDA would increase wheat stocks in their Sept Crop Production report. 

By Monday’s close, both winter wheat exchanges were at new contract lows. Rain is in the forecast for the Southern Plains, which is expected to help the newly planted and soon to be planted winter wheat crop get off to a good start. Light selling was also tied to the US dollar, which although lower today has seen 8 straight weeks of higher closes and is sitting at or near 6-month highs. ABARES is estimating Australia’s wheat crop at 25/4 MMT, 800 TMT below previous estimate. This will be 36% below last year.

On Tuesday wheat opened the overnight session lower across the board, but turned to trade mixed by the time the night session was drawing to a close. Gains were kept in check by Monday’s Crop Progress report, which showed decent harvest progress in the Northern Plains as well as good planting progress in the Southern Plains. Most of the overnight and early activity was focused on last-minute position squaring ahead of today’s report. The report had a few surprises for wheat, with the biggest one being that the report was friendly wheat.

USDA made no changes to the US wheat supply and demand numbers, which was friendly as most expected USDA to lower exports. On the world stage, USDA put old crop stocks at 267.1 MMT, 1.3 MMT below expectations and 1.2 MMT lower than last month. USDA estimated new crop world stocks at 258.6 MMT, 5.7 MMT below expectations and 7.0 MMT below last month. The decrease in stocks was due to USDA lowering production estimates for 4 of the 7 major exporting countries as only Ukraine, Russia, and US did not see reductions.

In Wednesday’s session wheat opened the overnight session lower in MW and KC while Chicago opened with small gains. Early selling was tied to traders continuing to try and find their legs after the release of the Sept Crop Production report. Most traders were surprised USDA did not increase wheat production estimate or trim demand, but that might come with the release of the Small Grains Summary report at the end of month. Light selling was due to forecasts calling for rain in the Plains. The 6 to 10 day and 11-to-15-day forecasts are calling for rain which will help get the winter wheat crop off to a good start. The fact that world wheat stocks are at lowest level since 2015 added support. Support also came from reports Russia staged another round of attacks on Ukraine grain facilities.

On Thursday wheat opened lower across the board and continued to trade in a lackluster fashion throughout the night and into the day session. Technical selling started wheat on the defense as traders took a break from buying to test the holding power of the new long positions. Light selling was also tied to forecasts calling for rain, which will help the newly planted winter wheat. Reports of missile and drone attacks in both Russia and Ukraine went on without much fanfare as it appears traders are done chasing that headline. Stats Canada’s model-based production report put all wheat production at 29.84 MMT vs expectations of 30.4 MMT and vs Aug estimate of 29.5 MMT and 34.34 MMT last year.

Dec Mpls support is at $7.50 while resistance is at $8.50.

For the week, Dec MW was at $7.89 up 18.5 cents, Mar Mpls was at $8.04 up 16.25 cents. Dec Chicago was at $6.0425 up 8.5 cents, and Dec KC was at $7.465 up 14.5 cents.