Canada Markets

North American wheat markets continue to walk the fine line between what is viewed as a comfortable global situation along with challenges faced with the HRW harvest in the United States.

The U.S. Wheat Associate's weekly harvest report indicated that 30% to 40% of the Texas and Oklahoma wheat crop had been harvested as of June 13, with activity pushing north into Kansas. Some fields are being abandoned in the driest regions of the south, while yields are reported between 5 and 30 bushels per acre, with the average pegged at 19 bpa.

Today's Crop Progress report in the U.S. indicated that 16% of the winter wheat crop has been combined as of Sunday June 15, up from 9% last week although below the five-year average of 20%. One social media report suggested the harvest pace would reach 25% as of the current report.

One point of interest seen in the July chart is the rapid narrowing of the July/September spread. Closing as wide as an 8 1/4 cent carry in early June, seen on the lower study of the attached chart, this spread traded as narrow as a one cent inverse during today's session (July over the September) although closed at a 1/4-cent carry (September above the July. This level remains as resistance for the spread after closing at this same level on March 20. This spread has not closed as an inverse since May 2013, while market watchers will be focused on both quality and yield data as the harvest progresses further north.

Current buying interest shown by the commercial sector continues to be offset by investor selling as investors reduce their risk by paring long positions. CFTC data as of June 10 shows non-commercial traders reducing their net-long position by almost 23% to 18,075 contracts, the smallest net-long position held in 15 weeks. With both daily and weekly stochastic momentum indicators either over-sold or very close to it, further selling may be limited.

Today's close ended just below the contract's 200-day moving average which is found at $7.09/bu., a level which has largely held trade this month. Should this level fail to hold, further support may be found at the 61.8% retracement of the move from the January low to the May high at $6.97/bu. and the 67% retracement of $6.84 1/4/bu.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES/)

© Copyright 2014 DTN/The Progressive Farmer. All rights reserved.