Hard Red Winter Wheat Too Wet To Harvest?
Today’s Spotlight Market
While large speculators continue to hold a net-long position in K.C. Wheat futures, the bullish enthusiasm appears to be waning. During the 7 day period ending June 10th, non-commercial traders shed over 6000 contracts off of their net-long positions according to the Commitment of Traders report. However, the speculators were outright bearish on Chicago Wheat futures, having turned net-short of Soft Red Winter Wheat by becoming a seller of over 19,000 contracts during the same period. This positioning of the two Winter Wheat futures has led to a widening of the K.C. Wheat premium vs. Chicago Wheat to nearly $1.30 versus the September futures.??? ?
Fundamentals
Wheat producers in the Plains have lamented the lack of moisture this past winter that has plagued this season?s production of Hard Red Winter Wheat. However, now that the Wheat harvest is taking place, and producers are looking for dry conditions to get the crop out of the ground, heavy rainfall has occurred in this previously parched region, halting the harvest in its tracks and sparking concerns of an outbreak of disease hurting the quality of the soon to be harvested crop. Low quality Wheat may end up as livestock feed, which is sold at a lower price, and would be bearish for Corn futures but a bullish event for K.C. Wheat futures, as it would curtail the amount of HRW Wheat available for use in milling bread flour.
Wheat prices may also receive some support from what looks to be a disappointing grain harvest from Russia this season, as a late start to the harvest coupled with reports of lower yields that could ultimately curtail the nation?s grain exports. Lower production from Russia combined with the uncertainty surrounding the political situation in Ukraine, may send grain importers to more ?reliable? supplies such as the U.S. and Europe as long as prices are generally competitive.? USDA export sales for the 2014-15 marketing year totaled 372,600 tons last week, which was towards the lower end of analysts? expectations.? ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for September K.C. Wheat, we notice what appears to be a bottoming formation developing as prices have held above the 700.00 price level and the 14-day RSI has turned upward after a brief stint in oversold territory. We are starting to see a convergence of the 20 and 200-day moving averages, with prices trading near both of these indicators. 702.50 is seen at support for the September futures, with resistance found at the June 9th high of 748.00.
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