Market Analysis: Week’s Gains are Lost on Friday
The wheat price made slow advances during the first four days of the week. A slow advancing commodity market is usually the best. This type of market action usually last longer and the gains out run a market that post large gains in single day. This was not the case for this week of trading in the wheat market. On Friday, the closing price erased all the early gains. From a technical standpoint, the wheat turned from a bullish market to a bearish market. Now, the wheat has to regroup and find support.
Cause: The lack of export demand disappointed wheat traders. During the week, rumors surfaced of China a potential buyer of wheat on the world market. When this country purchases wheat, quality is a priority. They have purchased high protein wheat in recent months form the United State and Canada but their quantity has been small. Rising wheat prices and depleting stocks is the reason for their interest in importing wheat.
Not only China but also Russia is experiencing the same situation. Russia oversold their wheat inventory last fall. They have been importing wheat but in small quantities. Russian officials were meeting to discuss the tight grain situation and their 5% grain import tax. As Friday afternoon, no decision reported. They will have to lift the tax in order to obtain the quantity they need to import for domestic usage ahead of their next wheat harvest.
This was a week of hope for wheat exports. The lack of news sent the buyers of wheat in the early part of the week back into the wheat market with sell paper on Friday. The wheat market lives on rumors for only a short time. Bullish wheat traders want to see results, quickly.
After the close on Friday, Egypt issued a wheat tender. Early this week, Egypt stated they have enough wheat to last until the middle of June. This wheat tender will be for deferred delivery. Egypt has the ability to buy a sizable quantity under the right conditions. Soft red winter wheat from the United States is the cheapest in the world.
Tune in Monday for the results!
Leffler Commodities, LLC
2901 Lakeshore Drive
Augusta, KS 67010
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