Canada Markets

September MGEX spring wheat reached a fresh low on Wednesday of $7.84 1/2/bushel prior to changing directions to close 4 1/2 cents higher at $7.91/bu. This is the first higher close in six sessions, while reaching the weakest trade seen since June 2 or more than two months. Today's move follows the Aug. 15 loss of 19 cents that saw the September contract close below $8/bu. As well, the Aug. 3 session saw the continuous active price break below the 61.8% retracement of the move from the August 2019 low to the May 2022 high, calculated at $8.39 1/2/bu.

Today's move will hopefully spell an end to the short-term move that saw the September contract fall by $1.63 1/4/bu from the July 25 high to the Aug. 16 low, or over 17 sessions. As seen on the attached continuous active chart, this is the largest drop seen in the continuous active chart since the $5.42 1/4/bu drop from the May 22 high to the July 2022 low, which was realized over a 33-day period.

As seen with the horizontal red lines on the attached chart, potential support is seen with weekly lows of $7.75 1/2/bu, then again at $7.69/mt. A breach of this support could lead to further downside, with weekly lows on the continuous active chart at $7.37/bu, then again at $6.68 3/4/bu. A breach of nearby support could see price fall to its lowest level seen since June 2021 or more than two years.

The blue bars of the histogram show that spring wheat has fallen out of favour by speculative traders, with the noncommercial net-long position falling in each of the past two weeks to 7,230 contracts, or the lowest net-long reported in four weeks.

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

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