Canada Markets

Troubling Signs in Old-Crop Spring Wheat

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
DTN's Spring Wheat 5-Year Seasonal Index chart shows the National Spring Wheat Index closing at $4.78/bushel for the week ending April 20 (red line), even lower than seen on this chart, in stark contrast with the typical seasonal move that would see the spring wheat price peak in late May. (DTN graphic)

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

Follow him on Twitter @Cliff Jamieson



To comment, please Log In or Join our Community .