Grain Spreads: Wheat Rips Higher

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Commentary

The USDA surprised with today’s wheat report, as new-crop ending stocks fell significantly below expectations due to a much larger production cut than anticipated. USDA dumped a lot of data today, but the key numbers included the smallest winter wheat crop in more than a half century, with the winter wheat crop coming in 154 million bushels below the average trade guess. That dropped the projected 2026-27 wheat ending stocks estimate to 762 million bushels, down from 935 million bushels this year. This may not be surprising to those who have toured the Plains where drought has ravaged the crop, and the Kansas crop tour is moving through the state today, finding thin stands and freeze damage. The report is very bullish for wheat in my opinion, and post-report action pushed Kc wheat to limit up, 45 cents higher on the day. Managed money came into this week with a short position in the Chicago contract and maybe positioned net long post WASDE report. No trade recs as of this post. I want to see if Kc has follw thru up past 8.00 basis July futures. 

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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