Canada Markets
Spring Wheat Futures Attempting to Stabilize
DTN analysis shows last week's December spring wheat close at the lower 20% of the five-year range for the week. Spring wheat is viewed as historically cheap, but has reached a lower low each day since, and has fallen 12 3/4 cents over the first four days of this week. This is a time of year when the seasonal trend for wheat would typically see price move higher from late-September to late-February.
Thursday's close resulted in the first higher close realized in six sessions on the December contract, with a gain of 1/2 cent to close at $5.24/bushel. This was achieved only after the contract reached its lowest point in 30 sessions on Thursday, while the close near the top of Thursday's trading range may warrant consideration.
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Thursday's trading bar came within a 1/4 cent of a perfect doji pattern, or a bar or candlestick where the session's open and close are equal. Given the close near the upper-end of the range, this signals what is viewed as a long-legged doji, in this case, a situation where buyers have won the session's battle for direction and sentiment may be changing.
Resistance on the daily chart is seen at the contract's 50-day moving average at $5.25 1/2 per bushel. Thursday's close held above the 50% retracement of the move from the September low to September high at $5.22 3/4 per bushel for the second straight day. Additional support lies at $5.14 1/4, the 61.8% retracement of the same uptrend and the 67% retracement of this move is seen at $5.10 1/4 per bushel.
The lines on the first study shows weakening futures spreads, a signal of a growing commercial bearish sentiment, while the blue bars on the histogram on the second study points to noncommercial traders reducing their bearish net-short futures position over the past six weeks, as of the most recent Oct. 22 report.
Cliff Jamieson can be reached at cliff.jamieson@dtn.com
Follow him on Twitter @CliffJamieson
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