Despite hot and dry conditions faced by hard red winter wheat growers in the southwestern wheat belt of the United States, along with a dry forecast for Western Europe and the Black Sea region, wheat prices struggled at the end of the week. December spring wheat finished 6 cents lower on June 6, its first daily loss in three sessions. At the same time, the weekly chart shown closed 3 1/2 cents lower over the week, its first weekly loss in three weeks.
From a chart perspective, the December contract reached its highest level in six weeks during the week of June 1. The move failed to sustain a move above the 33% retracement of the move from the January high at $6/bushel and the May low at $5.27/bu., calculated at $5.51/bu. While the $5.50/bu. level may also be viewed as psychological resistance, the move also failed to sustain a move above the downtrend line on the weekly chart, drawn from the January high. This resistance is calculated at $5.47 3/4/bu. on the weekly chart.
While not shown, DTN's five-year seasonal index chart shows the nearby spring wheat price reaching a peak in late May, with a bottom expected late in the month of September. We are moving into a period of seasonal weakness.
As seen on the first study, stochastic momentum indicators on the weekly chart are turning sideways, while holding in the lower-end of the neutral zone range.
The blue bars of the histogram of the lower-study shows noncommercial traders paring their net-short position in the week of May 26, while recently released CFTC data shows this group paring this position for a second week to 17,894 contracts net short as of June 1.
The red bars on this study show commercial traders paring their net-long position as of May 26, while this position was also pared in the week ending June 2. Despite the bearish signals, the net-long position held by commercial traders remains a supportive signal for this market and bears watching.
Cliff Jamieson can be reached at firstname.lastname@example.org
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