March CME settled fractionally lower, KC fractionally higher, and the prevailing themes include an excessive fund short, bitter cold temps in the Plains and rising interior prices in Russia. ARC maintains that downside wheat price risk is limited to 5-15 cents. Crude’s test of $60 implies yet more strength in major exporting currencies lies ahead, and we’d be cautious turning bearish wheat amid funds’ record short position in KC wheat.
Snow cover is adeqaute across the N Plains, but is absent from CO, KS, OK and TX. The EU & GFS models agree that minimum low temps in the next 5 days will reach into the single digits there Sun-Tuesday. Damage will be impossible to quantify, but given funds massive short in KC it’s likely that seasonal lows were scored in mid-December.
US export sales totaled 18 Mil Bu, above the pace needed to meet the USDA’s annual forecast. Russian interior prices have hit new 17-week highs at $4.10-4.40/Bu. US dollar weakness could trigger a test of $4.50, spot, in early 2018. Traders should be using a warm weather decline to secure breaks in wheat.
