MGEX spring wheat for December delivery reached a fresh contract low of $5.40/bushel in Tuesday's trade, while extending the move to a low of $5.38 1/4 per bushel on Wednesday. Wednesday's move saw the new-crop contract close lower for the seventh time in eight sessions, closing 3/4 cents lower at $5.40/bu.
This move is seen despite a slow start to spring wheat seeding shown in the United States, with the USDA estimating spring wheat planting at 7% complete, as of April 19, behind the five-year average of 18% complete. No progress was shown for the state of North Dakota, which compares to the five-year average of 9% complete.
This move is also despite this week's downgrading of the crop condition estimate for hard red winter wheat from 62% good to excellent to 57% good to excellent. HRW is also seen giving up early week gains.
The continuous active December spring wheat chart shows a recent double-bottom of $4.86 1/2 and $4.88/bu. reached in September and November of 2019 (Dec 2019 contact), immediately followed by a double top at $6/bu. reached in January 2020 (Dec 2020 contract), locking in a range of trade moving forward.
Retracement theory would suggest the next level of potential support at $5.30 3/4 per bushel, the 61.8% retracement of the move from the November low-to-January high on this continuous chart. A breach of this level could allow for a further slide to the 67% retracement at $5.25/bu., which may be counted on to prevent a further slide to the November low.
The green bars on the lower study represents the commercial net-long futures position. It is interesting to see a high reached the week of Sept. 17 of 18,449 contracts, followed by a lower high reached at 14,663 contracts for the week ending Dec. 3. Yet-another lower-high was reached the week of March 10 at 12,096 contracts and this net-long position has fallen in each of the five-weeks since to 3,536 contracts as of April 14.
The bullish sentiment on the part of commercial traders has waned over the past five weeks and bears watching.
Cliff Jamieson can be reached at email@example.com
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