The path of least resistance remains higher for spring wheat futures, with the new-crop December contract entering into uncharted territory.
The December 2022 contract gained $1.10/metric ton during the week of May 9 to $13.13/bushel, its fifth higher close on the weekly chart in six weeks and the second-largest weekly gain seen during the life of the contract. This close was above the $13.09 3/4/bushel high reached in the week of Feb. 25, 2008, for a fresh all-time high on the continuous December chart, as seen attached.
The May 15 evening session saw a continued move higher, with a bullish gap in trade formed. During the first two days of this week, the December contract has added an additional 71 1/4 cents, reaching a high of $14/bu.
It is interesting to note that the histogram seen in the lower study shows the noncommercial net-long position in spring wheat increasing for a second week as of May 9 to the largest bullish position held in three weeks at 25,093 contracts, while close to the largest position held since November 2021. At the same time, despite bullish headlines seen daily covering the global situation, speculators are showing restraint/discipline, with the size of this position down 14.9% from the all-time high reached in November.
While not shown, the Dec22/March23 futures spread has strengthened modestly during two days of this week to 5 1/2 cents (Dec trading over the March). Over the past 30 years checked, or since 1991/92, this is the first time that this spread has appeared as a bullish inverse on this date, although on May 16, 1997, this spread was shown at zero or even money.
Cliff Jamieson can be reached at firstname.lastname@example.org
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