Wheat futures extended their losses from late last week as the consensus of sufficient global supplies gains momentum. Wheat futures are down .20c today extending the biggest slump in wheat prices in nearly five months.
The USDA estimates global wheat inventories to rise by one-half percent by June of next year (from last Friday’s USDA Crop Production report). USDA data also showed the premium that exporters paid for the soft-red winter wheat variety at terminals near New Orleans have been the lowest in almost eight months.
“The wheat market is due for a correction. The market rallied too high. When everyone runs for the exits you see massive liquidation,” said Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current wheat futures situation. Moreno adds, “In my opinion, (wheat futures) are probably going to go even lower.”
The trend for wheat futures is still technically up (in my study), and I am still looking to take long positions. If wheat futures continue to trade at these lower levels through the end of the week, I may have to reverse my thinking and trading direction.