Market Analysis: Wheat Price Trend Reverses
Last week’s price action gave us a hint and this week price movement confirmed. The wheat price is now in a down trending price pattern on the charts. For six days in a row, lower lows made in the December Kansas City wheat contract. During this week, technical traders exited their long positions. This included trend following funds.
The fundamental cause for the sharp break in price is a lack of fresh news. Bull markets constantly need fresh supply and demand news. This has been lacking the last two weeks, therefore, the sell off in the wheat price.
The conditions in the southern Plains States continue to stay dry for winter wheat planting. A drought monitor map shows a D-4 condition for most of Texas and Oklahoma. This driest of conditions is moving into the southern section of Kansas. One timely rain could get the wheat up but it will take numerous rain events to make a crop in this area.
World wheat demand is decent but most of the sales posted out of the Black Sea Region. Egypt filled a 300,000 metric ton wheat tender early in the week from Russia. The United States is the source for high protein wheat but movement is in small quantities. India announced approval of exporting two million metric tons of wheat and rice. This adds another country to the world wheat exporters.
Monday, September 12 is report day by the USDA. This is a 7:30 a.m. report. The USDA will wait until the small grain report at the end of September to update their wheat production numbers. Wheat will be at the mercy of the price action in the corn market to start next week.
Leffler Commodities, LLC
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Augusta, KS 67010
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