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Bullish news needed for wheat market, analyst says

A KC wheat setback is seen at $5.37 as initial target, analyst says.

Wheat will need a steady flow of bullish supply news to hold its uptrend.

Overnight, European milling wheat futures were down 0.36%. Chicago wheat open interest as of October 21 was up 4,143 contracts. Algeria bought nearly 700,000 tonnes of milling wheat at their tender. Turkey seeks 175,000 tonnes.

Market Fundamentals

The USDA Foreign Agriculture Service sees Australia production this year near 28 million tonnes, up from 15.2 million last year. Exports may jump to 18.5 million tonnes from 9.5 million last year. There are some short-term concerns about too much rain. There is also rain in the six- to 10-day forecast for the U.S. Plains, and this along with a key reversal for December Kansas City wheat might be a sign of a near-term peak.

Technical indicators are extremely overbought. December wheat closed lower on Wednesday, with an inside trading day. Dry conditions in the U.S. and Russia plus expectations for a lower production from Argentina have lent support.

Traders now see Argentina’s wheat production under 18 million tonnes, down from the October USDA estimate of 19 million and the September estimate of 19.5 million.

Wheat futures remain in a steep uptrend and rallied to the highest level since December 2014 on weather concerns and active tenders from key world importers. Dry conditions across the Northern Hemisphere remain a risk for newly planted crops, which need to establish before winter dormancy.

For the weekly export sales report, traders see wheat sales of 200,000 to 800,000 tonnes.

Market Ideas

With the extremely overbought condition, it will take a steady flow of bullish news to hold the market in an uptrend. Selling resistance for December Kansas City wheat comes in at $5.74 per bushel, with $5.51 and $5.44 as initial support. Look for a setback with $5.37 as initial target. December wheat resistance is at $6.34, with support at $6.12 and $6.06.


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*** This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. Any information or recommendation contained herein: (i) is not based on, or tailored to, the commodity interest or cash market positions or other circumstances or characterizations of particular investors or traders; (ii) is not customized or personalized for any such investor or trader; and (iii) does not take into consideration, among other things, risk tolerance, net worth, or available risk capital. Any use or reliance upon the information or recommendations is at the sole discretion and election of the subscriber. The risk of loss in trading futures contracts or commodity options can be substantial, and traders should carefully consider the inherent risks of such trading in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of The Hightower Report is strictly prohibited.

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