Wheat manages to stay above the 200-day moving average

I am Stephen Davis, senior market strategist at Walsh Trading, Inc., Chicago, Illinois. You can reach me at 312-878-2391.

The only grain market staying above the 200-day moving average is Chicago Wheat, which tried to recover after dropping nearly every day since mid-May. Trading volume over the last two sessions has been above average. These are signs that it may be ready for a rally, in my opinion. Managed money traders are now holding short positions and a short covering rally could occur before Thursday's release of the monthly World Agricultural Supply and Demand Estimates (WASDE) report. 

The WASDE report is released by the United States Department of Agriculture's (USDA) World Agricultural Outlook Board (WAOB), which serves as the central hub for USDA’s economic and market intelligence, offering both U.S. and global commodity outlooks and in-depth analysis on weather impacts on agriculture. The report provides annual forecasts for supply and use of U.S. and world wheat, rice, coarse grains, oilseeds, and cotton, among many other commodities. 

On June 30, two other significant reports will be released by the USDA's Economics, Statistics and Market Information System. The Acreage Report presents acreage by planted and/or harvested areas by state for corn, soybeans, wheat, oats, barley, rye, sorghum, rice and many other crops. The Grain Stocks Report, issued four times yearly, covers stocks of all wheat, durum wheat, corn, sorghum, oats, barley, soybeans, flaxseed, canola, rapeseed, rye, sunflower, safflower, mustard seed, by states and U.S. and by position (on-farm or off-farm storage) It includes the number and capacity of off-farm storage facilities and capacity of on-farm storage facilities.

A trade strategy is to buy September 2026 Wheat at 594.0. Risk the trade and sell September 2026 Wheat at 584.0 stop, good til cancelled (GTC). Profit objective is sell at 620.0, GTC. 

An option trade strategy is to buy September 2026 Wheat, $6.00 - $7.00 call spread. Cost of this spread is 22.0 or $1,100 per spread contract. The most you can make is $5,000 per spread contract. This is a very good risk/reward ratio, in my opinion.

(200-day moving average represented by black horizontal line.)

To discuss trading strategies, contact me anytime. Have an excellent day. 

Stephen Davis
Senior Market Strategist 
Walsh Trading

Direct 312 878 2391 
Toll Free 800 556 9411
sdavis@walshtrading.com  
www.walshtrading.com

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