Spring wheat futures continue to show a bearish response as the grain markets struggle to mount a recovery. Wednesday's trade moved 6 1/2 cents lower, to $5.35 3/4 per bushel, while losing 20 cents over four sessions. While the most active soft red winter contract continues to hold above this week's lows while hugging its 20-day moving average, the March MGEX spring wheat contract has blown through its 20-day moving average, its 200-day and its 100-day moving average in the past four sessions.
The move has also seen a breach of the 38.2% retracement of the move from the November low to January high on the daily chart calculated at $5.44/bu. on Tuesday, while ending below the 50% retracement line at $5.37/bu. in Wednesday's trade.
Tuesday's low found support at the contract's 50-day moving average at $5.35 1/4 per bushel (purple line). Given further weakness, potential support lies at the upward-sloping trend line drawn from the Nov. 25 low at $5.31 3/4 per bushel, while the 61.8% retracement line is found at $5.29 1/2 per bushel.
The first study on the chart points to a weakening trend in both the March/May and May/July futures. The weekly chart (not shown) shows the March/May unchanged so far this week, while the further out May/July spread has weakened for a second week by 1/2 cents to minus 8 1/2 cents. The nearby March/May closed at minus 9 1/2 cents, while testing chart support.
The blue bars of the histogram on the second study shows noncommercial traders holding a bullish net-long position for three consecutive weeks ending the week of Jan. 21, now holding the largest bullish position seen since August 2018, although this week's data as of Jan. 28 could easily show a return to holding a net-short position.
Over the past five years on this day, the March contract closed in a range from $5/bu. to $6.13 3/4 per bushel, with today's close the lowest for this date realized in four years. Wednesday's close falls in the lower one-third of this range, while moves higher in the past two sessions were met with selling interests.
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