Wheat Weekly Comments

Wheat Weekly Comments

To start the week wheat opened the overnight session mixed with Mpls steady while the winter wheat exchanges opened the session higher. All three exchanges opened at their highs and sold off from there. Early selling was tied to improving weather conditions for the Southern Plains. Light selling was also tied to pressure from reports that Turkey is pushing both Ukraine and Russia to come to an agreement to extend the Black Sea Export Initiative. Ukraine is reporting their wheat crop condition is 92 to 97% good and that it has come through winter in decent shape. Monday’s losses pushed Mpls close to contract lows and the winter wheat exchanges to new contract lows.

On Tuesday wheat opened the overnight session higher and held small gains throughout the overnight session. Trading was thin and light as wheat only traded in a tight 2 to 5 cent trading range overnight. Early support came from bargain hunting buying as wheat is oversold and in need of a correction. Light support also came from Monday afternoon’s Crop Progress report which continues to show a poor rated wheat crop. Wheat reversed direction once the day session started. Weather forecasts calling for increased chances for rain for the Southern Plains added pressure. A stronger US dollar added late selling pressure. It appears the financial sector did not like Fed chairman’s Powell’s comments to congress on the need to continue increasing interest rates. Wheat has been hammered the past few sessions and sitting at or near contract lows. This means there is no war premium or weather premium in this market.

In Wednesday’s session wheat opened mixed with Mpls lower, KC higher, and Chicago steady. But it did not take long for all of the wheat exchanges to slip into the red and trade lower throughout the session. Early selling was tied to fund selling and last-minute position squaring ahead of today’s report. To everyone’s surprise USDA left all of wheat’s supply and demand numbers unchanged. US wheat ending stocks were estimated at 568 MB unchanged from last month and 5 MB below expectations.

On the world stage, USDA put ending stocks at 267.2 MMT, 2.5 MMT below expectations and 2.1 MMT below last month. On the production side, Argentina’s production increased 400 TMT, Australia up 1 MMT, Brazil 500 TMT, India 1 MMT, and Kazakhstan 2.4 MMT. For all indications the report was neutral for the US numbers and friendly world numbers, but yet wheat took the path of least resistance and sold off hard to close out the session. Wheat no longer has any war premium built or weather premium built into current price.

On Thursday wheat opened the overnight session steady in KC, higher in Mpls and Chicago. Early support was due to technical buying as traders try and correct an oversold market condition. Ukraine officials estimate 2023 wheat crop at 15 to 18 MMT vs 20 MMT last year. In export news, Japan bought 81 TMT of wheat yesterday with 51 TMT being US. Algeria bought 200 TMT of durum. Since Feb 21, May MW has traded lower 10 of 11 sessions losing 80 cents. May Chicago has traded lower 12 of 15 sessions since Feb 14 losing $1.0925. KC May traded lower 9 of 11 sessions since Feb 21, losing 93.25 cents.

May Mpls wheat support is at $8.50 while resistance is at $9.50. Sept Mpls support is at $8.25 while resistance is at $9.50.

As of March 5, KS’s winter wheat crop was rated 17% g/e, down 2% from last week. OK’s winter wheat crop was rated 39% g/e, up 3% from last week. Grazed is at 63%, equal to last week vs 54% average. TX’s winter wheat crop was unchanged at 19% g/e. The crop is 19% headed in TX vs 17% last week and 10% average.

For the week, May MW was at $8.245 down 48.25 cents, Sept MW was at $8.20 down 40.0 cents, May Chicago was at $6.7925 down 32.25 cents, and May KC was at $7.9825 down 18.0 cents.