Canada Markets

Old-Crop HRS Wheat Faces Technical Resistance

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
@CliffJamieson
July MGEX HRS has breached resistance during the past two sessions while further resistance exists at $8.85 1/2 and again at $8.97 1/4. Today's close above the 100-day moving average was the first since November 2022. The brown line on the first study shows the July/Sept spread at minus 1 3/4 cents. The red histogram bars on the lower study point to the largest noncommercial net-short position held since September 2020. (DTN ProphetX chart)
July MGEX HRS has breached resistance during the past two sessions while further resistance exists at $8.85 1/2 and again at $8.97 1/4. Today's close above the 100-day moving average was the first since November 2022. The brown line on the first study shows the July/Sept spread at minus 1 3/4 cents. The red histogram bars on the lower study point to the largest noncommercial net-short position held since September 2020. (DTN ProphetX chart)

The grains struggled to find a bullish argument on Tuesday but the spring wheat trade proved an exception. The nearby July contract settled 5 1/2 cents higher at $8.78 3/4/bushel, clearing technical resistance for a second session.

Monday's close at $8.73 1/4/bu closed above the resistance of the 38.2% retracement of the move from the contract's Oct. 10 high to the May 3 low, calculated at $8.67/bu. This is shown by the horizontal red line, while a path may be cleared for a continued move to the 50% retracement at $8.97 1/4/bushel, as seen by the horizontal green line.

Today's close landed above the contract's 100-day moving average (purple line) at $8.74 1/4/bu, after failing to sustain a move above this resistance four times since April 3. This is the first close above the 100-day moving average since Nov. 21.

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Also preventing a move higher is the downward-sloping trendline (blue line) drawn from the Oct. 10 high, with resistance at $8.85 1/2/bu.

The brown line in the attached chart reflects the old-crop/new-crop July/September futures spread. After reaching a 5 1/4-cent spread or carry on April 27, this spread reached even money today while closing at minus 1 3/4 cents, its narrowest spread since April 26, or 14 sessions.

The lower study shows the weekly noncommercial net-position as reported by the CFTC. As of May 9, speculative traders held the largest net-short or bearish position seen since September 2020. It may not be a surprise to see this group reverse decisions made in recent weeks and cover shorts.

Register today for the upcoming DTN Ag Summit Series event, "Crop Updates from the Field." We will visit with farmers from across the country, talk about the latest dicamba and pesticide news and discuss DTN's latest weather and market outlooks. The program begins May 23, at 8:30 a.m. CDT. We understand if you're too busy to attend live. It will be available for replay; however, you must register before the May 22 deadline to gain access. Registration is free, and you can find more details here: www.dtn.com/agsummit.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow him on Twitter @Cliff Jamieson

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July MGEX HRS has breached resistance during the past two sessions while further resistance exists at $8.85 1/2 and again at $8.97 1/4. Today's close above the 100-day moving average was the first since November 2022. The brown line on the first study shows the July/Sept spread at minus 1 3/4 cents. The red histogram bars on the lower study point to the largest noncommercial net-short position held since September 2020. (DTN ProphetX chart) 
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