Declining winter wheat crop conditions, the unknown around winter kill and the idea of lower winter wheat acres has the KC market leading the way higher. It was just last Tuesday the March KC/Chgo wheat spread sat at 2 cents under; today the March KC finished 5 cents over. Recent excessively cold conditions in the central southern Plains are already starting to moderate. The unknown around winter kill coupled with the idea of lower winter wheat acres will work to keep the flat price supported if and when it tries to sell off. The question then becomes how much speculative short covering do we see between now and Jan 12th. For what it is worth I do hear that the competitions winter wheat crop appears to be in good shape. Going forward I dont see anything coming out of the USDA that should directly buoy the old crop if the current rally furthers itself it will be due to new crop considerations.
Interior cash wheat markets show a steady to higher bias. This scenario holds true for the export markets as well. I dont think the demand is all that great as the lack of movement is forcing the basis higher. Spreads in both Chgo and KC saw improvement; flat price short covering was the best impetus.
Wheat charts all read higher as we have cleared the first hurdle of minor resistance. March Chgostill has to deal with the mid-low $4.40s while March KC still has to deal with the mid-high $4.40s. Im not wild about chasing the current rally but I have to think prices will honor recent established support until we see what the USDA has to say on the 12th. The mid-$4.20s should work as support for the March Chgo contract while the mid-high $4.20s should work for March KC.
Daily Support & Resistance for 01/04
March Chgo Wheat: $4.29 - $4.42
March KC Wheat: $4.32 - $4.45
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