Well, there you have it. After a long drawn out bull run in corn and beans, and new crop wheat pushing well above this summer’s highs, a bullish crop report appeared to have established a top as wheat and corn put in key reversals down. Soybeans followed three days later with their own key reversal lower as the entire commodity space saw major long liquidation on rumors that China would be increasing their interest rate and the inflation fears at least temporarily subsided.
After a weak start on Monday and Tuesday, wheat managed a strong rally and by Friday had barely closed above the trading range highs in Kansas City and Minneapolis, and took Chicago prices close to their trading range highs. The Fed’s announcement of another quantitative easing program pummeled the US dollar and sent investors grabbing every commodity they could get their hands on.
Wheat markets surged higher last week, quickly running up to the trading range highs in Minneapolis and Kansas City, while Chicago managed to get just above the halfway point of its trading range. With quality concerns mounting around the globe, we continue to see the high quality futures markets of KC and Minn gain on Chicago, with those spreads pushing to new highs.
It’s been a very long time since USDA gave us the kind of across-the-board bullish numbers in a report like those that we got on Friday. The numbers were eye-popping and any hint that corn supplies were plentiful, as suggested by the stocks report just a week earlier, were erased. Again, corn was clearly the leader of the grain complex, but soybeans and wheat weren’t going to be left behind; not to mention they had their own bullish numbers to support them as well.
Like the rest of the grains, wheat was on the ropes last week as funds held a mass exodus across the complex.
The markets were already in a minor liquidation mode, when USDA released the quarterly stocks report along with the small grain summary. Finding another 300 million bushels of corn turned a minor sell-off into a rout. Chicago Dec wheat lost 65 cents for the week, while KC lost 68 cents and Minn was down 56 cents. Dec corn lost 55 cents and Nov beans were down 69 cents.
The wheat market had something for everyone this week, but it’s unlikely that anyone really got anywhere after all was said and done. Sharply lower, sharply higher price action just continued the pull-your-hair out volatility that has defined this market for the last six weeks. The charts ended the week with an outside week lower, but good luck if you think selling it is a slam dunk.
After spending most of the week slipping lower, wheat managed a strong day on Friday to end the week in positive territory. While fundamentals in wheat remain very positive, it’s the corn and bean market that has taken over leadership of the grain complex despite harvest in full gear. The grain complex is also finding huge support from hedge funds who added to record long positions in corn as the weaker dollar and disappointing yields fueled bullish attitudes.
Price action for the wheat complex remained volatile last week, as the market continued to digest the plethora of news and rumors emanating from the Russian drought. With so much uncertainty surrounding a major exporter, we can see why the markets have been so choppy.
Wow, wow, wow! Major resistance melted like a hot knife through butter as wheat futures rocketed higher on the record drought in Russia remaining as entrenched as ever. Record temperatures, hot winds and wildfires added to the decimated crops across the major growing regions of Russia, Kazakhstan and into Ukraine while the world tried to calculate what would become of the exporting capability of the world’s largest wheat exporting region.