Wheat Showing Signs of a Low?

Adam Pukalo |

When looking at a 6 month chart for wheat the trends have been lower.  

There have been small rallies in between, but no real momentum has been gained. 

May Chicago wheat has traded to the lowest level since September 2021. 

Short term demand and supply factors hold a bearish tilt and the technical action is bearish. 

With almost a $1/bu decline in the last couple weeks I could see a pause in the decline happening.

I believe there is an opportunity to look at trading a "relief rally".

With any trade it is important to have levels on the upside and downside when you take profit or cut your losses.

Some farms have been asking about hedging new crop wheat.

You can use options on Chicago and Kansas City, however, I have found it difficult to trade Minneapolis options.

If you are wanting to use the Minneapolis contract, you could always use the straight futures depending on your risk tolerance.

Minneapolis Wheat May Futures - 1 Year

Chart sourced from Market Q

















Chicago Wheat May Futures - 1 Year

Chart sourced from Market Q

















Kansas Wheat May Futures - 1 Year

Chart sourced from Market Q


















Palm oil this month climbed to a six week high helping to support canola.

Weakness in the Malaysian currency and hopes of robust demand from the Middle East were reported.

Supply concerns for palm oil have resurfaced following a recent move by Indonesia to freeze some export quotes in a bid to cool domestic cooking oil prices ahead of Islamic religious holidays in March and April. 

March/April timeframe is when I start to look more seriously at new crop hedging strategies.

Often I see prices decline throughout the winter, then start to improve into spring.  

I'll be looking at bear-put strategies to help reduce the cost of the protection.

Clients can weigh the pros/cons of buying the put outright instead of making the protection cheaper with selling a put down below.

Canola May Futures - 1 Year

Chart sources from Market Q


















Soybeans have been holding on due to the weather in Argentina. 

There is very little rain in the forecast for the next two weeks and areas that did not receive rain recently could be under further stress. 

The Buena Aires Grain Exchange slashed its soybean production estimate to the lowest in 14 years. 

Traders seems to believe there should be enough production from Brazils massive crop to offset the smaller crop from Argentina.

A surge higher recently in the U.S. Dollar has been seen as a negative force. 

I've been recommending clients hedge their 2023 soybean crop on this rally.

These are very profitable prices and if something change in the Argentina weather the massive crop from Brazil could easily push the market lower.

Soybean May Futures - 1 Year

Chart sourced from Market Q


















Last week June live cattle posted contract highs before having a reversal lower on the close.

Some long liquidation might have happened before the Cattle on Feed Report on Friday.

The report showed placements for the month of January 96.4% of last year vs trade expectation of 97.1%.

Marketings came in at 104.2% vs 103.9% expected.

With placements coming in below trade expectations and marketings a bit higher than expected, the report was viewed as supportive for cattle prices. 

The sharp drop in weights is keeping beef production low, and the placements are low enough to keep a supply outlook tight for the first half of the year. 

Feeder Cattle April Futures - 1 Year

Chart sourced from Market Q

















Live Cattle April Futures - 1 Year

Chart sourced from Market Q