Like corn, funds continue to exit long positions in wheat futures following bearish supply and demand data released on Wednesday. The graphic at left features managed funds’ net position in KC as of last Tuesday, and the rapid change warrants a bit of profit taking. We caution against chasing breaks, however, and the North American spring wheat issues won’t be solved by just 6 weeks of price action.
US weekly export sales totaled 13 Mil Bu, down 1 Mil from the prior week. Total 17/18 export commitments rest at 321 Mil Bu, unchanged from a year ago, and so pace analysis argues against any further reductions. A pace of 12-13 Mil per week is needed to hit the USDA’s target.
ARC also mentions that dryness in Canada will get worse, not better, in the next two weeks, and there’s still very little precip offered to Australia’s wheat belt. A much wetter pattern is needed in Australia by mid-August, and overall major adjustments lie ahead to the combined major exporter balance sheet.
Sep CME is viewed as too cheap below $5.00, and no new sales are advised below $5.40-5.50.