Canada Markets

December MGEX spring wheat futures reached their weakest trade in 13 sessions on Monday, although posted a modest recovery from the session low to end 1 cent higher at $9.55 1/4 bushel (bu). Friday's close was below the 38.2% retracement of the move from the contract's recent August low of $8.61 3/4 bu to the October high of $10.24 1/4 bu, calculated at $9.62/bu, which may lead to a further slide to the 50% retracement at $9.43/bu.

Friday's close was also the first below the contract's 20-day moving average realized in over one month, while the Oct. 17 trade saw the session's high met with selling at the 20-day, now acting as resistance.

As of Oct. 14, the cash bid spread in the U.S. (U.S. spring wheat index -- U.S. hard red winter index) was minus 12.85 cents (HRW over HRS), signaling an abundance of protein wheat and waning demand for the higher protein spring wheat. Over the past five years, this spread has averaged $1.24/bu on this day, with hard red spring wheat trading over HRW.

The histogram bars on the lower study show the noncommercial net-long position falling in each of the past two weeks to 6,695 contracts as of Oct. 11, down 73.4% from the 2022 high of 25,203 contract net--long position reported on April 18. Despite global uncertainty, speculators remain conflicted when it comes to wheat, increasing their bullish net-long position in HRW to the highest seen in 16 weeks, while moving from a bullish net-long position to a bearish net-short position in soft red winter wheat futures.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(c) Copyright 2022 DTN, LLC. All rights reserved.