Canada Markets

The daily chart (not shown) for December spring wheat shows the price for new-crop spring wheat mostly holding between the contract's 50-day moving average at $5.57/bushel and 100-day moving average at $5.73 3/4/bu. this week. Friday's session saw the December contract gain 11 cents/bu. to finish at $5.66/bu., with signs of supportive commercial buying interest given a 1-cent narrowing of the December/March futures spread to minus 12 1/2 cents, the narrowest spread seen since late March.

As seen on the attached chart, the December contract gained 17 1/4 cents over the course of the week, the contract's fourth consecutive weekly gain and the largest weekly gain seen over this four-week period.

This week's high of $5.75/bu. reached the highest level seen in seven weeks, while the first study shows a narrowing Dec/March spread, indicative of supportive commercial interest in forward positions.

The lower study shows noncommercial traders still holding a net-short futures position as seen in the blue bars of the histogram, while a late addition on Friday saw very little change in the data as of May 21, with the bearish net-short position increasing to 7,412 contracts. This could be viewed as a bullish feature for this market, as noncommercial short-covering, which could ultimately spill-over from other markets, could lead to further gains.

Chart resistance lies at the contract's 100-day moving average at $5.73 3/4/bu. (not shown), while the 33% retracement of the move from the contract's August 2018 high and May 2019 contract low is found at $5.76 3/4/bu. A breach of this level could result in a further move to 5.84 1/4/bu., the 38.2% retracement of the same downtrend, while the 50% retracement is found close to psychological resistance at $6.01 1/4.

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

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