Canada Markets

After breaking below the May MGEX spring wheat contract's 20-day moving average on Monday, the stage was set for a continued slide, further prompted by today's peace talks between Ukraine and Russia, even though the results may be questionable.

The May contract ended 36 1/2 cents lower on Tuesday at $10.43/bushel, the largest one-day slide since March 16, while reaching its weakest trade since March 2. Today's trade bounced from a session low of $10.19 1/2/bu, while ending above the support of the 50% retracement of the move from the contract's January low to March high, calculated at $10.41 1/2/bu.

A close below this level could lead to a further slide closer to $10/bu. Technical support at this level consists of the 61.8% retracement of the discussed uptrend, while the 50-day moving average is calculated at $10.03 3/4/bu and the 100-day moving average is calculated at $9.98 1/2/bu.

The first study shows the most recent noncommercial net-long position for spring wheat for the week of March 22, which dipped lower for the first time in six weeks to 21,728 contracts. The noncommercial net-long position for soft red winter wheat also dipped lower this week and for a second week, while the noncommercial net-long position for hard red winter increased for a sixth week, indicating the struggles that the speculative trade is facing in their assessment of the current war's effect on the global market.

It is interesting to note that, as of March 29, the bullishness has leaked out of the May/July futures spread, as seen in the lower study on the chart. The May contract closed even money with the July contract on March 29, while the May traded at a 32 1/2-cent premium to the July contract as recent as March 8 and as high as 51 1/4-cent gain as of Nov. 1.

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

Follow him on Twitter @Cliff Jamieson

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