While on the floor of the CBOT I heard this comment numerous times. Must have been traders with bad timing. Last week May 2013 Wheat opened at $7.22 and closed the week at $6.97. Friday’s WASDE had a minor bearish look and the doji candle for that trading day confirms uncertainty in the report. This week so far we have seen tight price action near $7.00.
Interesting view on the ten largest wheat producers and consumers below from the USDA as of 2011/2012.
|
Rank |
Country |
Production (1000 MT) |
|
1 |
EU-27 |
133,486.00 |
|
2 |
China |
117,000.00 |
|
3 |
India |
85,930.00 |
|
4 |
United States |
56,514.00 |
|
5 |
Russian Federation |
56,000.00 |
|
6 |
Australia |
25,000.00 |
|
7 |
Pakistan |
24,000.00 |
|
8 |
Canada |
21,000.00 |
|
9 |
Ukraine |
21,000.00 |
|
10 |
Turkey |
18,500.00 |
|
Rank |
Country |
Domestic Consumption |
|
(1000 MT) |
||
|
1 |
EU-27 |
126,500.00 |
|
2 |
China |
112,000.00 |
|
3 |
India |
84,700.00 |
|
4 |
Russian Federation |
41,300.00 |
|
5 |
United States |
34,469.00 |
|
6 |
Pakistan |
23,400.00 |
|
7 |
Egypt |
18,300.00 |
|
8 |
Turkey |
17,900.00 |
|
9 |
Iran, Islamic Republic |
15,000.00 |
|
10 |
Ukraine |
12,000.00 |
Proceed to Page 2 for the latest COT Data...
COT Data
On the weekly chart you can see how big money has been posturing in wheat for the past year. The drop in wheat signaled with large liquidation on the part of Producers and Managed Money. You can also see liquidation on the part of our friends the Swap Dealers (biggest U.S. banks). Over the past two weeks something interesting has happened. Managed Money now has a larger net short position then producers. Managed Money net short -52,077 contracts, Producers net short -41,125, and Swap Dealers net long 100,613 contracts. So when will wheat have a major move up? Watch big money, they’re usually very good at signaling such moves.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
Fundamentals
On the daily chart you can see ADX numbers dropping showing the strong trend down weakening. More importantly see DI Differential, something is about to happen. MACD is riding the signal line with no divergence and Stochastics are just starting to correct out of oversold territory. You can also see on the daily chart why I disagree with the phrase “Sell wheat, sleep on the street.” The coming USDA Perspective Plantings may push wheat up or down.
Click to enlarge.
Have a prosperous trading week.
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