Canada Markets

December spring wheat closed higher for a fourth session, while reaching its highest trade in more than four weeks, a technical analysis signal of a change in trend.

The March 28 session saw the December close 11 1/2 cents higher at $8.82 1/2/bushel. Recent trade saw the December breach the contract's 20-day moving average (red line) on March 24 and the 50-day moving average (blue line) on March 28. The move has also seen today's close above the 38.2% retracement of the move from the October high to the March 10 low, calculated at $8.77 1/4/bushel (horizontal red line).

A sustained move above this resistance could lead to a test of the 50% retracement at $8.96/bu, which would also result in a test of the 100-day moving average at $8.92/bu.

The first study on the attached chart shows the stochastic momentum indicators on the daily chart nearing overbought territory, although the weekly chart (not shown), shows these indicators trending higher near the middle of the neutral zone on the chart, signaling the potential for a continued move higher.

The lower study shows the Dec23/March24 spread moving into an inverse this week, while closing at 2 1/4 cents (December over the March contract). This is a level not seen since Dec. 12. This spread was also inverted by 4 1/2 cents on this date one year ago, the only time in the past five years that this spread has been inverted on this date. The five-year average is minus 7 cents on March 28.

Bullish signals are seen in trade ahead of this week's USDA Prospective Planting report and March 1 Quarterly Stocks report. Ahead of Friday's Prospective Planting report, actual seeded acres of U.S. spring wheat were lower than the prospective planting estimate in 13 of the past 20 years, including four of the past five years, where the average seeded acres were 1% below the prospective planting estimate. This report tends to over-state hard red spring wheat acres.

As well, U.S. all-wheat stocks as of March 1 are estimated to be reported at 928 million bushels according to the average of pre-report estimates, down 9.8% from one year ago and would be the lowest since the 2007-08 crop year, or 16 years.

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

Follow him on Twitter @Cliff Jamieson

(c) Copyright 2023 DTN, LLC. All rights reserved.