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Walsh Trading's Weekly Grain Report


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Wheat’s strong surge higher to end the week comes on two fronts. First a jump in global buying on the world market especially from number one world buyer Egypt has rekindled thoughts of U.S. wheat becoming more competitive. Second from a technical perspective, December wheat futures closed above the 50 day moving average Thursday (10/14) at 412.4 for the first time since June 20th. Normally this wouldn’t be a major story. However the wheat market has had an extended managed money short position in it for a while at 151 thousand contracts. Consecutive closes above this average as we had to finish the week Friday could ignite more short covering by the funds.

Fundamentally, global buyers are finally active securing U.S. offers amid historically low prices. Late Thursday Egypt bought 60,000 tonnes of Russian wheat while securing another 120K tonnes from Romania. The amounts weren’t the story as much as the price was as it came in nearly $10 per metric ton higher than the tender two months prior. Saudi Arabia is said to be seeking 595,000 tons of hard red wheat while Syria is said to have bought over a million metric tons from Russia. Algeria is said to have secured 450-500K metric tons from the U.S.

However, it was a losing offer, of U.S. hard red winter wheat, that attracted more market attention at the latest tender. The cargo, tendered by Louis Dreyfus, was priced at $173.98 a tonne, some $4 a tonne below the cheapest offer of Russian wheat (also from Louis Dreyfus), and $6 a tonne below the winning Romanian bid. While the U.S. cargo was disqualified for being of a higher protein grade not matching the tender's specifications, the low price, for a higher specification wheat, surprised traders and fuelled a 5 percent two day surge in Chicago wheat futures, the world benchmark. Simply put if U.S. wheat becomes more competitive on the world market with consecutive weekly offers, the lows are in for some time in my view. Look to buy dips carefully next week just above the 50 day moving average basis December for an aggressive trade to catch more short covering in the days and weeks ahead.

Technical’s read like this for this week. For November beans support is down at 9.42 and with a close under 9.21 is next. Resistance is up at 9.79 and then 9.95. For December corn support comes in first at 3.41 and then 3.28 Resistance comes in at 3.63 and then 3.72. For December wheat support comes in at 4.02 and then 3.83. Resistance is up at 4.34 and then 4.47.

For those interested I hold a weekly grain webinar each Thursday at 3pm. It is free for anyone who wants to sign up and link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.

Sign Up Now

For more info on Walsh Trading’s Absolute Ag Performance CTA please click on the link below:

http://christianawalsh.wix.com/bnc--cl-lusk

Sean Lusk

Director Commercial Hedging Division

Walsh Trading

312 957 8103

888 391 7894 toll free

312 256 0109 fax

slusk@walshtrading.com

www.walshtrading.com

Walsh Trading

53 W Jackson Suite 750

Chicago, Il 60604



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About the author


Sean Lusk is a registered commodity broker and Director of the Commercial Hedging Division of Walsh Trading in Chicago. Sean began in the business as a runner on the trading floor during summer breaks from college in 1993. Upon his graduation from Southern Illinois University at Carbondale in 1996, Sean began his career on the trading floor of the Chicago Mercantile Exchange (CME). Overseeing billions of dollars of transactions working as a clerk in the Eurodollar pit, Sean took the next step and became a floor broker and member of the CME in 2003. He handled customer orders for banks and investment houses from all over the world from inside the Libor pit at the CME.

Now, at Walsh Trading, Sean utilizes his experience in the marketplace and his professional client service skills to aid and assist customers in their trading endeavors.  

He writes daily and weekly commentaries focusing on both the Precious Metals and Agricultural Markets along with related market activity.

Sean has been quoted in various media outlets discussing futures markets. 

These include:

 

  • Futures Magazine
  • Reuters
  • Forbes
  • Kitco
  • Nikkei Press
  • CCTV.com

 

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