Canada Markets

Spring Wheat Futures Stabilize

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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December spring wheat achieved its first higher close in nine sessions Wednesday. Support was found at the 61.8% retracement of the move from the August low to September high, along with the contract's 50-day moving average. The lower study shows the net-long futures position held by commercial traders (red bars) and the net-short futures position held by noncommercial traders (blue bars) drifting to neutral over the past four weeks. (DTN ProphetX chart)

The December spring wheat contract closed higher on Sept. 16 for the first time in nine days; chart support possibly played a role. The Dec closed 7 1/4 cents higher at $5.31 1/2 per bushel (bu), leading the move across the three exchanges while consolidating within the previous day's range in sideways trade.

Potentially countering the bearish data being released for the global wheat market and the continued bearish view of the North American spring wheat market is the notion that spring wheat prices are already viewed as inexpensive, with last week's Dec close at the 18th percentile of the 5-year range, while DTN's seasonal analysis indicates spring wheat prices tend to bottom in late September. Over the past five years, harvest lows for the Dec contract ranged from Aug. 31 through to Oct. 2, pointing to an average of Sept. 12 acting as the harvest low.

The Sept. 16 low found support at the 61.8% retracement of the move from the August low to September high, calculated at $5.23/bu, while the Sept. 15 close dipped below the contract's 50-day moving average only to rebound to close back above this moving average on Wednesday, calculated at $5.27 1/2 bu.

The stochastic momentum indicators on the first study have turned sideways, although the most bullish of changes in direction take place when these indicators close in oversold territory, or below 20%.

The histogram bars on the daily chart show both commercial and noncommercial traders moving towards a neutral position over the past four weeks. Neither side of the trade appears significantly committed to the direction of spring wheat trade, despite the bearish global data being released.

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