Wheat markets are facing a tough go on both sides of the Atlantic. European milling wheat for March delivery has closed lower in 11 of the past 14 sessions, with Tuesday's close 1.25 euros lower, at 194.25 euros. Friday's trade saw this contract price break the support of the 50% retracement of the move realized in the 2018 rally, from the 170 euros low reached in January, to the 219.75 euros July high.
Given further weakness, the next downside target can be found at 189 euros, the 61.8% retracement of the same uptrend, while the 66.7% retracement is found at 186.75 euros.
Overseas analysts are expressing dismay, as this is the time of year when Russian supplies dwindle and buyers turn to the next number of potential suppliers, which would typically include European supplies. Instead, reports point to Russia reducing export offers to new lows for 2019 in order to land recent business with Turkey, weighing on both cash prices and futures markets globally.
While not shown, the European milling wheat old-crop/new-crop spread is inverted. The May-September spread closed at 15.25 euros (May closing over the new-crop September contract), signaling a level of comfort surrounding new-crop availability that will lead to a slowing of front-end business in favor of cheaper new crop. This feature is not seen in U.S. futures and will place North American supplies at a price disadvantage.
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