The attached chart shows the move in DTN's National Spring Wheat Index (red line) as it relates to the five-year seasonal index (blue line) which would typically reach a seasonal high in late May. The two lines are seen diverging with front-end buying interest lacking.
While not shown, April 24 CFTC statistics shows the net-short position held by noncommercial traders increasing for a second time in six weeks to a net-short of 12,002 contracts, the largest bearish position seen in five weeks. The size of this net-short futures position grew by 67% or 4,817 contracts as of April 21, while also to the largest bearish position reported in five weeks. It is also interesting to note that this is the largest week-over-week change seen in this net-short position since Feb. 18.
As a result, both old-crop and new-crop trade saw fresh contract lows reached on April 24, then again on April 27. Both the July/Sept and the Dec/March futures spreads are nearing a test of their weakest levels seen over the life of the spreads signaling a weakening view of fundamentals.
When the continuous active spring wheat chart is considered, we see potential support on this chart ranging from the psychological support at $5/bushel ranging to a high of $5.03/bu., within sight of the April 27 close of $5.08 3/4 per bushel. A breach of this support area could result in a further slide to the September low on the chart at $4.86 1/2 per bushel.
Cliff Jamieson can be reached at firstname.lastname@example.org
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