Wheat Analysis - Jan. 13
Price action: March SRW wheat futures fell 11 cents to $7.46 3/4, the lowest close in a week. March HRW futures fell 18 1/4 cents to $7.59 1/4, the lowest closing price since $7.54 on Oct. 21. March spring wheat fell 25 cents to $8.95 1/2, the lowest settlement since Sept. 29.
Fundamental analysis: Wheat futures fell sharply a second straight day in the wake of USDA’s higher-than-expected U.S. winter crop seedings estimates. USDA estimated all U.S. winter wheat seedings for the 2022 harvest at a six-year high of 34.397 million acres, up 749,000 acres from last year and 142,000 acres above the average pre-report estimate. The increase was driven largely by higher-than-anticipated SRW plantings at 7.07 million acres, up 6.648 million acres in 2021.
Sluggish exports continued to burden wheat futures. USDA reported net U.S. wheat sales of 264,400 MT for the week ended Jan. 6 were up “noticeably” from the previous week, but down 20% from the prior four-week average, USDA said. Expectations ranged from 150,000 to 400,000 MT. Accumulated wheat export sales so far this marketing year, at 4.32 MMT, are 25% below the same period last year.
Also today, the International Grains Council (IGC) raised its forecast for 2021-22 global wheat production, partly driven by an improved outlook for the crop in Australia. In its monthly update, IGC increased its 2021-22 world wheat crop outlook by 4 MMT to 781 MMT. Strategie Grains cut its forecast for European Union soft wheat exports in 2021-22 citing strong competition from the Black Sea region and Argentina.
Technical analysis: Chart patterns have eroded substantially for winter wheat futures, with March SRW sustaining a downtrend since late November. March SRW futures have support at this week’s low of $7.35 1/2 and at the 200-day moving average at $7.34 1/4. A push below those levels may have bears targeting the October low at $7.25 3/4. First resistance is seen at this week’s high of $7.70 1/2, then at $7.80.
HRW bears' downside objectives include closing March futures below last week’s low at $7.54 1/2 and support at $7.50. First resistance is seen at yesterday’s high of $7.93 1/2, then at $8.00.
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