U.S. Hard Red Winter Wheat Prices Hit New 7-Month Highs


May K.C. wheat climbed 21 1/4 cents Thursday to its highest close in seven months as winter wheat contracts continue to respond to concerns of dry weather and wildfire risk in the southwestern U.S. Plains.

It may seem odd to some that U.S. wheat prices are trading this high when there is plenty of wheat available around the world, but the seriousness of this winter's drought took a step up this week and is putting the squeeze on the short side of the market. 

Grain analysts like Dewey Strickler with Ag Watch Market Advisors, LLC agree. He says Dryness in the southern Plains continues to take a toll on winter wheat.  Only 12 percent of the Kansas crop is rated in good-to-excellent condition with Oklahoma at 4 percent.  Rain will be needed when the crop breaks dormancy, but little is in the forecast for the next 10 days.  Export inspections last week were uninspiring at 10.2 MB which caused a downtick in the pace of shipments.  As of last week, the funds were short 415 MB.  However, this week’s gains imply that they have probably blown out of most of their position.

July wheat traded past resistance at 492.5 surging to 531 on Thursday.  As mentioned previously, when wheat bottoms in December or January, the average price gain is 18.1 percent which projected a target at 516.  One pattern points to climbing to 543.  The cycles indicate that a top could occur by the end of the week or March 6th.  Be aware the market is at its most overbought level since last July.  Looking at March, wheat futures are down 53 percent of the time.  Next week, the odds are even as to whether they will be higher or lower.

Source: DTN & Ag Watch Market Advisors

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