Wheat futures continued their downslide today with May15 sinking 15 ¼ cents in Chicago and settling at 4.70 ¼ and hitting a new life of contract low, this all despite Funds holding a record 100,000 contract short position. U.S. moisture has been beneficial with weather forecasts into next week for additional rains which is starting to paint a completely different production picture in the U.S. than last year. Weekly export inspections were penciled in at 20 million vs. 24.2 million last year and cumulative loadings were down 27% from a year ago with the USDA forecasting annual exports down 25%.
The trade is calling for a U.S. spring wheat planting progress number coming in tonight close to 53%, while they continue to be vexed over the possible scenario of new crop Black Sea wheat being offered well below the $200/ton mark- (Currently U.S. hard red winter wheat is being offered at $6.00 per bushel). The wheat trade is also starting to reflect on their history books going back to 2011 and 2013 when the Chicago wheat contract values fell below corn in order to encourage feeding. You should keep a peripheral eye on, as the Chicago futures creep toward a new yearly low, Russian prices being more than 6% higher than the 2011 – 2013 era as well as European values being more than 20% higher, with attractive Kansas City carrying charges to store the abundant southern wheat crop, here in the U.S..
Technically, year low support sits at 4.66, if values manage to push through this area things may get ugly quick, especially with the fundamental backdrop. We could see the 4.30 area sooner than expected. Longer and shorter term volatility is mid-range and prices still remain well below all key moving averages (20, 50, & 100 day). The short and long term trend are: Down. The remainder of this weeks’ trading may prove to be a turning point for the wheat markets, going into the summer months.
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