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Price action: July SRW futures fell 16 cents before settling at $6.06 1/4. July HRW futures settled 29 1/4 cents lower at $8.12 1/4, near the session low. Spring wheat futures fell 21 3/4 cents to $7.99 and settled near the session low.
Fundamental analysis: Wheat futures continue to fall under pressure despite strength in corn and soy markets. Wheat generally struggles to rally throughout the spring and summer as harvest takes place and grain is continuously sold, but extended weakness in the face of outside market strength is evidence of how bearish the outlook is for the grain. The Illinois Wheat Association conducted a survey of the state’s crop and found soft red wheat yields at 97.12 bu/acre vs the USDA estimate of 78 bu. The current state record is 79bu/acre. While Illinois is not a major wheat producer, seeing estimates come in well ahead of estimates was certainly not bullish for the market.
Weather remains favorable for the next couple weeks in key HRW regions, although the top end of yield is already lost. World Weather Inc reports that frequent rain over the next couple weeks will improve soil moisture and noticeably reduce drought. Rain will be most beneficial in central and northern production areas.
USDA is set to release export sales for the week ended May 18 tomorrow morning, with analysts expecting -75,000 to 100,000 MT for 2022/23 and 200,000 to 500,000 MT for 2023/24. Last week export sales were -42,136 MT and 336,761, respectively. The marketing year is winding down and there is still more work to do to hit the current USDA estimate for exports.
Technical Analysis: July SRW futures fell back near $6.00 support after rejecting off 10-day moving average resistance at $6.19 1/2. Bulls were unable to follow through and a new move-low is likely in store. The psychological $6.00 level will act as support, quickly followed by Tuesday’s move-low at $5.94 1/4. Further weakness will look for support at $5.75. Bulls want to retrace today’s weakness and overcome initial resistance at the 10-day moving average at $6.19 1/2, followed by the May 11 low at $6.25 1/2. Bulls ultimately want to force a higher high above the May 16 high at $6.64 1/4.
July HRW futures were the weakest of the bunch today, although Monday’s low has been defended thus far. Price has remained more volatile than SRW and HRS contracts. Support remains at Monday’s low of $8.07 1/4 and is quickly backed by the psychological $8.00 level. Further weakness accelerates selling towards $7.50 support. Bulls are targeting initial resistance at $8.35 1/4, the 40-day moving average, backed by yesterday’s high at $8.49 1/2. $8.75 has capped most of the upside since December and will remain key resistance that bulls want to overcome to signal a counter-seasonal rally.
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