This week, politics had as much to do with price action as fundamentals – talk of slashing trade deals and more rhetoric that threatened to spark trade wars.
The week started out strong for wheat — but that was as good as it got. Follow-through buying from the bullish plantings report quickly faded as reports of better-than-expected rains across the southern and central Plains over the weekend relieved a great deal of the concern about drought and crop stress.
It was the spring wheat market of Minneapolis that saw the most volatility however, as elevators switched basis from the March contract to the May, about a month ahead of normal. The large inverse in March quickly faded with a large outside day lower on the futures.
At Friday’s close, Kansas City futures settled at a five-month high, Chicago at a two-month high, and Minneapolis at an impressive seven-month high.
Wheat markets started off the year on solid footing, getting a strong rally as shorts moved to the sidelines on fears of more winter kill in the U.S. and abroad.
A sharply higher dollar, Southern Hemisphere harvest, bitter cold in the U.S., and record ethanol profits supporting corn are combining to keep wheat prices moving in a choppy, uncertain direction.
Wheat markets found some reason to bounce this week but still failed to move beyond the first resistance.
Winter wheat prices buckled this week, breaking below key trading range support levels.
Trading range lows were tested early in the week for the winter wheat markets while spring wheat moved sideways.
As long as corn is under pressure, wheat will get pulled lower as well.
Most traders are just holding their breath and hoping to get through next week without too much carnage.