Spring wheat led the wheat complex higher on Thursday, with the September contract gaining 12 3/4 cents and the December contract ending 12 1/2 cents higher. For the second straight day, the December contract found support at the psychological support level of $6.00/bushel, while the 50% retracement of the move from the contract's move from the July low to August high is also at $5.99/bu., which provides further support. Today's close was also back above the contract's 100-day moving average at $6.10/bu., after closing below this moving average on Wednesday for the first time in 13 sessions.
Today's move likely had buy-in from both the commercial and noncommercial side, unlike the move seen in winter wheat on Thursday. The brown line on the first study points to the December/March spread, which narrowed to reflect the first sign of commercial interest in five sessions. The blue bars on the second study reflect the noncommercial net futures position as reported by the CFTC as of Aug. 7, which signals of a move from a bearish net-short position to a modest net-long position of 441 contracts, the first net-long reported in eight sessions.
The lower study points to protein being less of a factor this year, given a higher protein winter wheat crop. The Aug. 10 U.S. Wheat Associates Harvest Report shows a total of 406 samples tested out of 500 total samples expected, with an a average at 12.5%, which compares to the 2017 average of 11.4% over the same period. The spread between DTN's National Average Spring Wheat Price (SW.X) less the National Average HRW price (HW.X), has slipped to $.188 cents, down sharply from the $2.95/bu. spread (spring wheat over HRW) reached in July 2017 and the weakest spread seen in more than 3.5 years. This can be viewed as a proxy for the demand for higher quality protein supplies, while may not support a continued uptrend without favourable signals from the export demand side of the equation.
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