Canada Markets

Wheat futures closed higher following two sessions of heavy selling, although the spring wheat contract trailed winter wheat higher. The nearby July contract ended 2 1/2 cents higher at $11.99 1/2 per bushel while the December ended 4 cents higher at $12.00 1/4/bu. While today's close was well below the session high, three of four of the nearby contracts ended above $12/bu with the front-month July contract falling just 1/2 cent below $12.

Market watchers may be mystified by this week's bearish move, with the media reporting the possibility that President Vladimir Putin will bow to global pressure to allow for the free movement of trapped Ukraine wheat on the Black Sea to move to countries desperately in need. At the same time, such a move will likely be accompanied by concessions in the sanctions levied against Russia and there seems little appetite for such a move. Late planting of spring wheat across the northern states, as well as the eastern Prairies, remains supportive while the U.S. winter wheat rating of 29% Good-to-Excellent remains the lowest seen since 1989.

The attached chart shows the December MGEX spring wheat contract has favorable technical support just below today's close. The December contract's 50-day moving average is calculated at $11.77 1/2/bu (upward-sloping blue line). As well, the 38.2% retracement of the move from the contract's January low to May high is calculated at $11.90/bu (horizontal red line). A breach of this support could lead to a continued slide to the 50% retracement, calculated at $11.25/bu.

The second study shows the Dec22/March23 futures spread at minus 1/2 cent (March over the December), the first negative spread or carry seen over the life of the contract. This could still be viewed as mildly bullish given its relationship to full commercial carry, although this spread or inverse reached a high of 17 1/4 cents in late November 2021.

The lower study shows the stochastic momentum indicators entering oversold territory, which may act to limit noncommercial selling in the days ahead.

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

Follow him on Twitter @Cliff Jamieson

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