Wheat Analysis - Jan. 25

wheat
wheat
(AgWeb)

Price action: March SRW wheat rose 17 1/2 cents to $8.18, around the middle of the day’s range and the contract’s highest close since Nov. 29. March HRW wheat rose 16 1/2 cents to $8.34 1/2, the highest close since Dec. 27. March spring wheat fell 1 1/4 cents to $9.47 1/4, after rising earlier to $9.65.

Fundamental analysis: SRW wheat futures closed near a two-month high and HRW futures settled at the highest price in a month behind ongoing concerns a potential Russia invasion of Ukraine may disrupt the global wheat trade. Russia is the world’s top wheat exporter and Ukraine is also a major grain supplier. Prices were also supported by state crop condition reports that reflected further drought-driven deterioration in the U.S. Plains HRW crop.

In Kansas, the HRW acres rated “good” to “excellent” dropped to 30%, down three points from the end of December, reports showed. Oklahoma’s good-to-excellent rating fell four points to 16%, Colorado fell five points to 20% and Nebraska fell three points to 36%. When the individual state HRW crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the HRW crop fell to 270.4, down 54.1 points from the end of November when USDA released its final national ratings until spring.

Technical analysis: Winter wheat bulls gained further momentum as SRW pushed above December highs, though the market gave back part of today’s advances during the last hour of trade. Initial resistance is seen at today’s high of $8.31 1/2, and bulls may now be targeting the March contract high of $8.67 1/2, posted Nov. 24. Initial support is seen around the psychologically important $8.00 mark and the 50-day moving average around $7.94 1/2.

In HRW futures, upside objectives include closing above resistance at $8.50 and at the December high of $8.71, along with the contract high of $8.92 1/4, posted Nov. 24. Support includes today’s low at $8.18 1/4 and the 50-day moving average at $8.16 1/4.

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