Over the past seven sessions, the March MGEX spring wheat contract has traded over a narrow 7 3/4 cent trading range, while Tuesday's 2-cent loss to $5.70 per bushel (bu) continues to hold above the $5.68 1/2 low realized over this period by a narrow margin, which also represents the lowest point traded in almost four months.
The red line on the second study of the attached graphic shows the March/May futures spread, which has narrowed from minus 8 3/4 cents on Oct. 30 to minus 5 1/4 cents Tuesday, unchanged from Monday's close and a sign of supportive commercial activity.
Perhaps the risk to this market is seen with the bearish sentiment held by the noncommercial trade, with the yellow bars shown on the lower study showing the net-short position held by this group as of Nov. 20 the largest seen since July 24, or the largest bearish positon held in 17 weeks. The stochastic momentum indicators seen in the first study are deep in oversold territory, which could act to slow further selling by this group.
As seen on the chart, a breach of the November low at $5.68 1/2/bu level could result in a further move to a test of the July 12 contract low of $5.59/bu. The continuous active chart (not shown) points to retracement support at $5.67 3/4/bu, a level that has supported prices since early September.
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