Kansas City wheat supported by shift to drier weather
July Wheat closed moderately lower yesterday after an earlier rally to its highest level since March 9 failed to attract new buying interest. Talk of the short-term overbought condition of the market plus further strength in the U.S. dollar helped pressure the market. European milling wheat futures closed lower after posting contract highs yesterday.
While the U.S. crop conditions are rated 30% good to excellent (the lowest for this time of the year since 1996), there was some rain in the forecast. The six- to 10-day forecast was mostly wet for the central and southern Plains yesterday, but the forecast now shows below-normal precipitation. In the one- to five-day forecast, eastern Kansas and the eastern half of Oklahoma receive some rain, but the eight- to 14-day model is also showing below-normal precipitation. The weather pattern seems to have shifted, suggesting a more bullish tilt. Traders have indicated the crop in France is rated 92% good to excellent. European Union 2021/22 wheat exports have reached 21.26 million tonnes, down from 22.08 million tonnes the same time last year.
The weather forecast seems to have taken a more positive tilt, but the technical action suggests some back and fill action may be in order. It will take a close above 1159½ in July Chicago Wheat to turn the charts bullish. Close in resistance is at 1130½, with support at 1076¼ and 1055½. July KC wheat support is at 1157½, with resistance at 1191 and 1235.
About the Author: Terry Roggensack, a founding principal of The Hightower Report, analyzes the livestock, grain and soft markets. Roggensack has over 30 years of experience in the commodity and financial futures industry. In the late 1980s, he briefly lived in London as acting director of a new London clearing firm. Prior to that, Roggensack was director of research at Stotler & Company.
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