Canada Markets

New-Crop Spring Wheat Range-Bound

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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New-crop December spring wheat has retraced 61.8% of its November-through-January uptrend, while struggling to go anywhere. The first study shows prices in oversold territory, with sideways momentum. The line on the middle study shows the Dec20/March21 futures spread slowly strengthening since November, while noncommercial traders have moved from a bearish net-short to a modest net-long position (lower study). (DTN ProphetX chart)

While North American stock markets have come roaring back following the coronavirus scare with record highs being reached, the grains continue to struggle.

Like the old-crop March contract, new-crop MGEX hard red spring wheat for December delivery has given up roughly 61.8% of its November-through-January gains, finding support at $5.70 3/4 per bushel in three of the past four sessions.

Daily closes are seen higher-lower-higher-lower for seven straight sessions, with trade ranging within an 8-cent range over the past seven sessions. During the past three days, session lows have reached $3.70/bu., a level of solid support. Further support lies at $5.68 3/4 per bushel, the lower level of the gap created in trade from Dec. 13 to Dec 16.

Nearby resistance lies at the contract's 50-day moving average at $5.76 1/4 per bushel, a level that has failed to support price in two of the past four sessions, while will likely act as resistance in the event of a move higher. Given a return to pre-cornonavirus levels could lead to a test of the double-top of $6/bu., reached on Jan. 2 and then again on Jan 22.

The middle-study shows a gradual strengthening in the March/May spread, moving from a recent low of minus 14 1/2 cents in December to minus 11 1/4 cents on Feb. 6. This spread remains as the most bearish level for this day in four years, with the previous three-year average calculated at minus 7 cents.

The lower study shows noncommercial traders holding a modest net-long position in spring wheat for the fourth straight week as of Feb 28, while this week's data could show this net-long position pared for the first time in four weeks, with this contract poised to closer lower for a third straight week.


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