May 28 trade shows new-crop corn (Dec. contract), new-crop soybeans (Nov. contract) and new-crop spring wheat (Dec. contract) all testing resistance at their respective 50-day moving averages.
As seen on the attached chart, December spring wheat has found support at the contract's 20-day moving average over the past four sessions, while on May 28, late-session selling prevented a close above the contract's 50-day moving average at $5.45 1/4/bushels. This would have been the first close above this resistance since April 9, and only the third close above the 50-day moving average since Jan. 30.
In order to extend a short-term move higher, this 50-day moving average must be breached, as well as trend line resistance drawn from the Jan. 22 high, calculated at $5.48/bu. (not shown). As well, the May 21 high of $5.50 1/2/bu. and the 33% retracement of the move from the January high to the May low, calculated at $5.51/bu.
Spring wheat can be viewed as inexpensive relative to historic levels. As of the May 22 weekly close, the nearby July contract closed at the 8th percentile of its five-year range. With concerns of dry conditions seen in Europe and ongoing focus on whether Russia will cap 2020-21 exports, it may be difficult to imagine much downside in prices.
The histogram on the lower study shows noncommercial traders (blue bars), holding a record bearish net-short position, as of May 22, of 22,979 contracts net-short. In some respects, DTN analysis can view this as bullish overall, given that a short term panic can lead to a sudden surge in prices. Also supportive for the market is the net-long position held by commercial traders (red bars). This is a supportive signal, as this group has a vested interest in the physical commodity. This group has remained consistently net-long since mid-February, which have grown this net-long position in each of the past five weeks.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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