Fundamental Analysis: It was a tag-along trade for wheat on Monday as corn and soybeans rallied on weather concerns and bullish expectations for the crop report. Wheat does deserve some weather related premium of its own, but not because of U.S. crop conditions. The U.S. spring wheat crop is still in very good shape with today’s Crop Progress report calling its 69 percent good or excellent. Heat in the Black Sea region is starting to cause some slight worry. Estimates for the Canadian crop are still all over the board. Conditions lean hot and dry for crops in the Southern Hemisphere. Wednesday is report day, so all bets are off then. The U.S. crop estimate is expected to grow because of bumper spring wheat potential, but analysts are looking for global ending stocks to revised lower.
Tech Comment: Chicago futures leaped over their 20- and 100-day moving averages and fell just short of testing the 50-day. The momentum swing in August has been enough that a bullish signal line crossover on the MACD was made. $5.50 is the next target of importance. That has been a modern level of long-term support for the grain. $5.50 also roughly coincides with a 50 percent retracement of the July move down. A 62 percent Fibonacci retracement point lies at $5.69 1/4.
Basis Trends: Gulf SRW +15/30, stdy, HRW -25/+5 – stdy, Corn Belt – SRW stdy, Midsouth – stdy, Plains HRW – stdy.
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