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Wheat Market - Just My Opinion

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USDA (OCE) is suggesting all wheat planted acres for 2018-19 will be 45.0 million (46.0 year ago) leading to a crop size of 1.815 billion bu. (yield 47.4 bpa) and a carryout of 813 million bu. (current projection for 2017-18 is 935 million)

New contract lows were seen once again in Chgo, KC and now Mpls. I have to think its all about first notice day liquidation. What was surprising was that the KC and Chgo wheat markets were able to rebound late to finish slightly higher on the day. Is the price action trying to suggest we may have gone low enough for now? Last year at this time (Dec 1st) we saw Chgo wheat register some interim lows. The KC market followed shortly thereafter. Whatever bounce we see over the near term will be mostly technical in nature. If the flat price continues to move lower it will be in response to lower Black Sea prices, the USs biggest competitor.

Interior cash wheat markets remain quiet. SRW at the Gulf continues to do little while HRW at the Gulf continues to be firm. The firm HRW at the Gulf is all about protein, not so much demand. After the fun and games were over last week establishing the VSR (remains unchanged at 11 cents a month Chgo) spreads widened out. Todays spread motion, improving, suggests Chgo spreads dont need to go any wider. KC spreads, however, remain a non-event.

So how many times have we seen reversals such as we saw today only to fail within the next few days? Will this time be different as it falls in line with what the wheat market did last year in the current time frame? All I know is that I cant be short at current levels and that has been a major lesson in frustration.

Daily Support & Resistance for 11/29

March Chgo Wheat: $4.26 - $4.36

March KC Wheat: $4.24 - $4.34

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About the author

Tom Fritz is a third generation commodity futures trader. His grandfather and his father were traders on the exchange. Tom began his career in 1971 with Tabor Grain which was later acquired by Archer Daniels Midland. Prior to co-founding IFG in 1994 Tom was the lead Chicago Board of Trade floor analyst for ADM. He produces Just My Opinion, a daily grain commentary that is well respected and viewed all over the world.



Contributing author since 11/7/2017 

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