Wheat Price Retreat
Today’s Spotlight Market
Short-covering buying by large speculators appears to have been behind the recent rally in Wheat prices as the most recent Commitment of Traders report showed a large reduction in the net-short position in both Chicago and Kansas City Wheat last week. For the reporting period ending May 19, non-commercial traders reduced their net-short position in Chicago Wheat by nearly 22,500 contracts to stand at 59,907 contracts. Kansas City Wheat saw the net-short position reduced by over 9,100 contracts to 16,570 contracts.
Fundamentals
The recent rally in Wheat prices, which took new-crop July Chicago and Kansas City futures to 5 week highs, failed to hold over the Memorial Day Holiday despite wide-spread flooding seen in the Southern Plains. Both Chicago and Kansas City Wheat futures were posting losses of nearly 4% on Tuesday as traders return to work following the extended holiday weekend.? Historic rainfall the past few weeks may affect the quality of the Hard Red Winter Wheat Crop in parts of Oklahoma and Texas. While this will affect this year?s harvest, it does finally break the 3-year long drought in Texas and help to lessen long-term drought conditions in both Oklahoma and Kansas.? While U.S. Wheat production will not set any records this season, we must remember that global Wheat supplies are more than ample and the recent strength in the U.S. Dollar is working against U.S. grain exports, which appear to more than offset any production disappointments this season.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for July Kansas City Wheat futures, we notice a ?bull-trap? was sprung last week as prices briefly traded above the down-trend line formed from the last ?major? high made back in December 2014. However, Wheat bears have re-exerted themselves in a big way to start the week, with the July futures closing down over 4% on Tuesday. The 14-day RSI which was trading just below 70 last week has turned very weak, with a current reading of 47.82. 518.75 is seen as the next support level for July K.C. Wheat, with resistance found at the recent high of 564.50.
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