WHEAT: KC Wheat Supported by Shift to Drier Weather
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July Wheat closed moderately lower yesterday after an earlier rally to its highest level since March 9 failed to attract new buying interest. Talk of the short-term overbought condition of the market plus further strength in the US dollar helped pressure the market. European milling wheat futures closed lower after posting contract highs yesterday. While the US crop conditions are rated 30% good-to-excellent (the lowest for this time of the year since 1996), there was some rain in the forecast. The 6-10-day forecast was mostly wet for the central and southern Plains yesterday, but the forecast now shows below normal precipitation. In the 1-5-day forecast, eastern Kansas and the eastern half of Oklahoma receive some rain, but the 8-14-day model is also showing below normal precipitation. The weather pattern seems to have shifted, to suggest a more bullish tilt. Traders have indicated that the crop in France is rated 92% good to excellent. European Union 2021/22 wheat exports have reached 21.26 million tonnes, down from 22.08 million tonnes the same time last year.
MARKET IDEAS
The weather forecast seems to have taken a more positive tilt, but the technical action suggests some back and fill action may be in order. It will take a close above 1159 ½ in July Chicago Wheat to turn the charts bullish. Close in resistance is at 1130 ½, with support at 1076 ¼ and 1055 ½. July KC Wheat support is at 1157 ½, with resistance is at 1191 and 1235.