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CBOT Wheat Futures Market Analysis

Free in-depth market analysis on the CBOT Wheat futures market written by a professional Wheat futures trader.

August 13, 2014

Wheat Futures Broker, Van Commodities, Inc.

On May, 06 the December Wheat future ( WZ14) hit an intraday high of 765. Since that time the contract lost close to thirty percent of its value by July, 29; scoring an intraday low not seen for a December Wheat contract in several years. On July, 29 at roughly five dollars and forty-two cents per bushel, WZ14 had become oversold based on several momentum studies and traders took profits on short positions leading into the USDA Crop Production and Supply/Demand Report of August, 12.

Having worked off the oversold technicals after hitting an intraday high of 591 on August, 06, with a roughly fifty cent bounce from the lows and with expectations for a bearish USDA report, traders resumed their selling of WZ14 on August, 07. The USDA report yesterday confirmed market participants’ expectations for both a good US Spring Wheat crop and burgeoning global supplies in the 2014/2015 crop year and WZ14 continued its downward trend. In today’s session August, 13 WZ14 lost close to six cents and the contract appears to be on the cusp of making new contract lows in the very near future.

Expectations of a large global Wheat crop for the 2014/15 year may almost be priced into the market, for the time being and we think there is a possibility for a tradable bounce in the near future. WZ14 is moving back into an oversold condition, based on several momentum studies and large speculative traders are carrying a large short position. With uncertainties about the Southern Hemisphere Wheat crop and much of the Northern Hemisphere crop news potentially priced into the market, support for WZ14 may be close at hand. Initial support for WZ14 may come in at 537-542 with further support at 525. Initial resistance may come in around 557-563 with further resistance 575-581.

May 15, 2013

Wheat Futures Trader, Van Commodities, Inc.

The July Wheat future (ZWN13) traded down strongly, even though front month corn and soybeans were roughly unchanged on the day. Expectations for needed rain over the weekend in the western plains is viewed somewhat bearishly, but the main factor for wheat appears to be slow export demand along with concerns about a strengthening dollar and the approaching northern hemisphere harvest. ZWN13’s break below the 7.00-7.04 area appears to have set off stop loss orders today and the contract may have further downside risk over the near term. A move towards 6.65-6.70 seems to be a reasonable possibility.

Short term momentum indicators would be supportive of further ZWN13 downside action. Initial resistance may come in at 7.03-7.06, with stronger resistance at 7.09-7.14. Initial support over the near term may come in at 6.83-6.86, with stronger and intermediate term support at 6.65-6.73.

April 1, 2013

Chicago Wheat Futures Trader, Van Commodities, Inc.

Price action for the May Wheat future (ZWK13) over the past year has come full circle. Today ZWK13 dipped below the May 14, 2012 intraday low of 6.650, hitting an intraday low of 6.59 3/4 before closing at 6.64 3/4. Although ZWK13 has been trending down since making a secondary high of 933 1/2  on November 09, 2012; the roughly sixty cent move last Thursday caught wheat bulls looking the wrong way.

The market was reacting to the USDA’s Grain Stocks data which came in fifty-seven million bushels higher than analyst‘s and traders expected. Although All Wheat Planting Intentions data came in at levels market participants were expecting, the roughly fifty-six and a half million acres of expected sowings are roughly three quarters of a million acres more than last year. Traders seem to be pricing in reduced demand for US wheat and good weather during spring, possibly resulting in comfortable ending stocks in 2012/13. There are still variables that the wheat market will have to contend with going forward and WK13 may not be far from a tradable bounce.

ZWK13 is oversold based upon several momentum indicators in both short and intermediate term time frames. Initial support for ZWK13 may come in at 6.50-6.59, with longer term support at 6.35-6.43.

December 29, 2012

Wheat Futures Broker, Van Commodities, Inc.

The Chicago Board of Trade (CBOT) March Wheat contract (WH13) traded up Friday 28, 2012 on the back of strong Export Sales that not only beat market expectations for weekly sales, but came in at the highest level for the year. The sales of 1,009,000 metric tons (mt) were considerably higher than the USDA’s needed weekly pace of 455,000mt. Over the past three weeks export sales have come in above the USDA’s needed pace to achieve their forecast. The question at this point is whether sales will continue to come in above the required level of roughly 415,000 mt going forward. Although the wheat fundamentals may be improving, WH13 appeared to be held back by the Corn and Soybean markets.

Over the past seven weeks WH13 has depreciated roughly eighteen percent. The price move has resulted in an oversold condition based on both short and intermediate term momentum indicators. Initial support for WH13 may come in at 7.55-7.65 and stronger support at 7.45-7.50, which may be an intermediate term low if the market trades down ahead of the January 11 USDA report. If the market holds the lows of last week in the short term, initial resistance may appear at 7.95-8.12 and stronger resistance at 8.20-8.32.

October 14, 2012

Grains Broker, Van Commodities, Inc.

Wheat has been trading in a one dollar range since hitting a high for the move at $9.53 on July 23 2012. Uncertainty about world wide supplies has resulted in a volatile market within the $1.00 range. Questions about the quality and size of Australia and Argentina’s ultimate harvest and the possibility of world demand shifting to the US as Russian and Black Sea area country’s supply of wheat runs down has put support under the US wheat market. The most recent carryout numbers from the USDA, reported October 11, 2012, for the 2012/13 season were supportive for wheat on a world wide basis, although the US carryout was higher than market expectations, but lower than USDA levels released in the September 2012 report. Corn carryout levels for 2012/13 as reported by the USDA were also supportive for wheat prices. 

Technically, Wheat basis the December contract WZ12 is neutral both on short term and longer term momentum studies. WZ12 configuration on daily and weekly charts appears to be constructive on an intermediate term basis, although the close, 12/10/12, below the 862 area needs to be reversed quickly. Initial support should come in between 8.41-8.50 and further support around 8.35. Resistance comes in between 8.62-8.70 and then 8.80-887.

May 7, 2012

Wheat Futures Broker, Van Commodities, Inc.

The Chicago (CME) wheat futures contract, basis July (WN12) scored an inside day today after falling 55 cents on the back of bearish news throughout last week. Friday’s intraday low for WN12 was the lowest level for the contract since WN12 started its bear move May 2011 at 9.57. The bearish news last week included; the Wheat Quality Council’s expectations for a Kansas wheat yield of 49.1 bushels/acre-the highest yield estimate in more than a decade, Informa Economics expectations for U.S. winter wheat production of 1.656 billion bushels-25,000 bushes higher than their forecast in April and the expectations for a fast start to the spring wheat growing season. The status for spring wheat plantings was confirmed today with news the crop is 84 percent planted, ahead of the five-year average of 49 percent. Global wheat supply should be another factor limiting upside action on short covering rallies for WN12.

WN2 may have found a temporary trading bottom. Initial resistance should come in around 6.30 with more significant resistance from 6.45 -6.55. A move above 6.65 would lead to a reappraisal of WN12’s price action.

March 22, 2012

Grains Trader, Van Commodities, Inc. 

There was really no standout news to remark upon for the wheat market today, other than the May and July contracts started the day at the bottom end of their multi week trading ranges. Some underlying concern of an April frost hurting the early maturing wheat crop may also be weighing on some traders minds. The only other item was much of the days action involved spread trading possibly traders setting up for next weeks report.

The Chicago Board of Trade (CBOT) July Wheat contract (WN12) started the US day- session on the lows and at the bottom end of its previous 22 day trading range. WN12 subsequently trended throughout the day to the upside resulting in an outside reversal day up, which along with the strong trending day signals, for many traders, more potential price gains. Initial resistance for the contract is between 658 and 664 where several DMAs reside. WN12 should find support between 649-651. WN12 has traded back into a larger defined range of 642-675 and will be looking for longer term direction from the USDA report March 30, 2012.