WHEAT: 21-Month Low with Lack of Weather Reasons to Buy

NEAR-TERM MARKET FUNDAMENTALS

While it is difficult to determine just how much of the plethora of bearish fundamental issues have been factored into wheat prices with the $0.90 break in the last 2 weeks, bearish fundamentals remain in place, and many are expanding in scope. In addition to widespread rains in the central and southern plains, the market is presented with a reduction in Russian wheat export tax levels and Ukrainian officials indicate they are working on a deal to extend the grain corridor for another year. Certainly, the wheat market could be approaching massive fundamentally oversold psychology with a Bloomberg article indicating wheat is likely to forge the longest string of monthly price declines since 1964. In yet another bearish development French soft wheat crops rated in good or very good conditions increased last week. News that Canadian producers intend to plant the most wheat in 22 years added to the bearish tone this week. Statistics Canada pegged all wheat plantings at 27 million acres, up 6% from last year and this compares with trade expectations for 26.3 million. On the other hand, India continues to see the threat of tremendous heat next month with the Indian meteorological department looking for monthly maximum temperatures to be posted. Sluggish export sales data added to the bearish tone. The weekly export sales report showed that for the week ending April 20, net wheat sales came in at 155,733 tonnes for the current marketing year and 202,090 for the next marketing year for a total of 357,823.

Cumulative sales have reached 88.6% of the USDA forecast for the 2022/2023 marketing year versus a 5-year average of 95.2%. The data suggests that the export forecast for the year may be adjusted lower in the next USDA update. For deliveries for the first notice day, traders see wheat deliveries near 100-300 contracts. The EU's soft-wheat production in the 2023-24 season is now seen at 130.2 million tonnes versus a March estimate of 130.9 million tonnes. The USDA attache from Australia sees the wheat crop near 29 million tonnes for the 23/24 season. This follows two years of record-breaking crops.

TODAY'S MARKET IDEAS

Short-term technical indicators are showing extreme oversold readings after the 7-day collapse, but for now, the market lacks the type of supply news to help the market forge a low. Close-in resistance for July Wheat is at 643 3/4 and 660 1/2, with 612 3/4 as next support.