Canada Markets

While North American stock markets have come roaring back following the coronavirus scare with record highs being reached, the grains continue to struggle.

Like the old-crop March contract, new-crop MGEX hard red spring wheat for December delivery has given up roughly 61.8% of its November-through-January gains, finding support at $5.70 3/4 per bushel in three of the past four sessions.

Daily closes are seen higher-lower-higher-lower for seven straight sessions, with trade ranging within an 8-cent range over the past seven sessions. During the past three days, session lows have reached $3.70/bu., a level of solid support. Further support lies at $5.68 3/4 per bushel, the lower level of the gap created in trade from Dec. 13 to Dec 16.

Nearby resistance lies at the contract's 50-day moving average at $5.76 1/4 per bushel, a level that has failed to support price in two of the past four sessions, while will likely act as resistance in the event of a move higher. Given a return to pre-cornonavirus levels could lead to a test of the double-top of $6/bu., reached on Jan. 2 and then again on Jan 22.

The middle-study shows a gradual strengthening in the March/May spread, moving from a recent low of minus 14 1/2 cents in December to minus 11 1/4 cents on Feb. 6. This spread remains as the most bearish level for this day in four years, with the previous three-year average calculated at minus 7 cents.

The lower study shows noncommercial traders holding a modest net-long position in spring wheat for the fourth straight week as of Feb 28, while this week's data could show this net-long position pared for the first time in four weeks, with this contract poised to closer lower for a third straight week.

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

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