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NEAR-TERM MARKET FUNDAMENTALS: The overnight rally pushed the market to the highest level since June 14th as talk that lower corn production will force increased wheat feeding this year helped to support. The weaker US dollar is also seen as supportive but export news has been a bit negative as a surge in Black Sea exports this year will force other key world exporters to export less. Improving weather in Australia and Argentina are seen as negative supply forces. Spillover buying support from higher grain prices and talk that even Russia selling prices are at least seeing higher and higher prices helped to support. European milling wheat futures jumped 1.9% overnight. After choppy and lower trade early on Friday, fund buyers turned active in a wide spectrum of commodity markets and wheat was no exception. The market followed other grain and commodity markets lower early in the session with fears of a long liquidation selling trend for commodities but outside forces turned up to support. Kansas City wheat found support early from talk that the advancing La Nina condition could keep the plains drought in tact with a two-week outlook of hot weather for the southern plains helping to support. There are some rains for winter wheat areas in the forecast for the next ten days which might support better planting conditions in some areas. Strength in other grains and a surge up in Minneapolis wheat helped drive the market to new highs for the move. Algeria bought 300,000 tonnes of durum wheat. December Minneapolis wheat is up nearly 50 cents from Thursday’s lows to Friday’s highs. Morocco is tendering for up to 300,000 tonnes of US hard wheat and Jordon is in the market for 20,000 tonnes. Bangladesh is tendering for 50,000 tonnes of wheat and South Korea is tendering to buy 53,170 tonnes of US wheat. The Commitments of Traders reports as of August 23rd showed Non-Commercial traders were net short 17,298 contracts, a decrease of 6,026 contracts for the week and the short-covering trend is seen as positive. Non-Commercial and Nonreportable combined traders held a net short position of 39,745 contracts, a decrease of 5,460 contracts for the week. Commodity Index traders held a net long position of 205,196 contracts, up 2,163.
TODAY’S GUIDANCE: Chicago wheat may have limited upside potential from a supply perspective ahead but the tightening supply of hard wheat could be a significant factor. Traders also see the southern plains drought as a serious threat for next year’s crop. Wheat is still a follower of corn for now.
TODAY’S MARKET IDEAS: The next key resistance for December Kansas City wheat is at 914 1/2 with support at 877 1/2. December Chicago wheat next key resistance is up at 812 3/4, with 785 1/2 and 771 3/4 as support.
WHEAT: Wheat is Still a Follower of Corn; For Now
by Terry Roggensack on August 29, 2011
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
NEAR-TERM MARKET FUNDAMENTALS: The overnight rally pushed the market to the highest level since June 14th as talk that lower corn production will force increased wheat feeding this year helped to support. The weaker US dollar is also seen as supportive but export news has been a bit negative as a surge in Black Sea exports this year will force other key world exporters to export less. Improving weather in Australia and Argentina are seen as negative supply forces. Spillover buying support from higher grain prices and talk that even Russia selling prices are at least seeing higher and higher prices helped to support. European milling wheat futures jumped 1.9% overnight. After choppy and lower trade early on Friday, fund buyers turned active in a wide spectrum of commodity markets and wheat was no exception. The market followed other grain and commodity markets lower early in the session with fears of a long liquidation selling trend for commodities but outside forces turned up to support. Kansas City wheat found support early from talk that the advancing La Nina condition could keep the plains drought in tact with a two-week outlook of hot weather for the southern plains helping to support. There are some rains for winter wheat areas in the forecast for the next ten days which might support better planting conditions in some areas. Strength in other grains and a surge up in Minneapolis wheat helped drive the market to new highs for the move. Algeria bought 300,000 tonnes of durum wheat. December Minneapolis wheat is up nearly 50 cents from Thursday’s lows to Friday’s highs. Morocco is tendering for up to 300,000 tonnes of US hard wheat and Jordon is in the market for 20,000 tonnes. Bangladesh is tendering for 50,000 tonnes of wheat and South Korea is tendering to buy 53,170 tonnes of US wheat. The Commitments of Traders reports as of August 23rd showed Non-Commercial traders were net short 17,298 contracts, a decrease of 6,026 contracts for the week and the short-covering trend is seen as positive. Non-Commercial and Nonreportable combined traders held a net short position of 39,745 contracts, a decrease of 5,460 contracts for the week. Commodity Index traders held a net long position of 205,196 contracts, up 2,163.
TODAY’S GUIDANCE: Chicago wheat may have limited upside potential from a supply perspective ahead but the tightening supply of hard wheat could be a significant factor. Traders also see the southern plains drought as a serious threat for next year’s crop. Wheat is still a follower of corn for now.
TODAY’S MARKET IDEAS: The next key resistance for December Kansas City wheat is at 914 1/2 with support at 877 1/2. December Chicago wheat next key resistance is up at 812 3/4, with 785 1/2 and 771 3/4 as support.
Tags: Grains, Wheat
About Terry Roggensack