Well looking at a few KC wheat spreads today everyone.
My feelings on the wheat market are as follows. Obviously there is an extreme shortage of wheat on the market (60 year low stocks). So far so good as far as the new crop wheat is concerned. Austraila has been in a drought for around 5 years now and finally they have recieved some benificial rain (although the drought might not be over). They are currently boasting about how big their wheat crop is going to be this year (25 mmt if I remember correctly, which is a hell of a lot more than usual). So currently the world new crop market looks like its off to a fairly good start. I also think 09 wheat is going to be good. I think this for a few reasons but mainly because corn and soybeans are imo going to take off this year and rob acres right back from wheat (farmers seem to be reluctant to plant a lot of wheat).
So I like spreads in this situation. I like buying may/july KC wheat @ 50. I like buying may/sep @ 55 and buying may/dec @ 30-40. I like selling july/sep KC wheat @ 10-15. I also like selling july/dec KC wheat @ even money.
These are all spreads that would work given the fundamental situation but some are better than others. I would recommend buying may/july and selling july/sep and july dec. I look to do this today if given the chance.
As for meal....Its pretty much a technical trade but seasonally it makes sense too. We have extremely low stocks in beans right now (200 mb I think) we also have huge demand from china currently (that doesn't look to slow down anytime soon (bad for my position). Basically I am putting on this trade because of the action on the chart. I think we could trade around 355-365 in a short amount of time. Also I don't have much faith in bean oil at this time (bio diesel plants are running in the red big time). I think it is way too expensive right now and was simply just riding on the coats of crude oil (which it needs to devorce itself from). Also we seasonally should start to see warmer weather (although so far we havn't up here in Iowa). However when we do see warmer weather that should take some demand away from soymeal (it is high in carbs and feeders will feed a heavy dose of it to their hogs and cattle during the cold of winter).
For you outright guys on corn and beans. 573.75 is the key area for corn today and a break through that and we could be off to the races again. I would be careful of fading any rallies up around that level. Support is at 567.75, 562, 556, 553.50 and then at our trendline @ 553.50.
Beans are a different story. A break above 15.29 and we set the tone for a drastically higher day today. However a break below 15.10 and we do just the opposite.
Thats it for today and hopefully I can get those KC spreads done.
Good Trading Everyone.
