December hard red spring wheat closed lower for the fourth time in five sessions, closing 15 3/4 cents lower at $7.50 3/4/bushel (bu) taking out the Sept. 5 low to reach a fresh contract low, as the North American harvest draws closer to the finish line.
As seen on the attached continuous active chart, this is the lowest trade since June 2021, or more than two years. Today's trade in the December contract surged sharply higher to 6,387 contracts, the highest daily volume seen this month. While not shown, the Dec/March futures spread weakened to minus 18 cents, which is nearing the minus 18 3/4 cent low reached on Sept. 1, signaling a growing bearish view of market fundamentals.
Nearby chart support is seen at $7.50/bu, a psychological support level that acted to support today's close. Should this level be breached, the three dotted lines represent potential support from weekly lows on the chart. The first level is $7.37/bu, a double bottom reached in June 2021. Next is $6.68 3/4/bu, a May 2021 low, followed by $5.96 1/4/bu, a weekly low for the week of March 29, 2021.
The blue bars on the lower histogram shows noncommercial traders increasing their bearish net-short position for a fourth week to 12,110 contracts net-short, the largest bearish position held since August 2020, or more than three years. This is despite U.S. hard red spring wheat stocks forecast to reach the lowest level seen in 16 years in 2023-24, while Canadian supplies are also seen sharply lower.
U.S. dollar strength is a bearish feature in today's trade, with today's move signaling the strongest trade since November 2022. In addition, for a second week, Egypt's GASC tendered but chose to purchase only minimal volumes, this time 170,000 mt after over 2 million metric tons were offered for November delivery.
While Russia is forecast to be the No. 1 global exporter in 2023-24, for a second week it were locked out of the Egyptian tender, holding at a minimum FOB price of $270/mt while France, Ukraine, Romania and Bulgaria are willing to ship at lower values. A continued threat remains that this floor price is lowered by the Russian government with increased volumes offered at a lower price.
Cliff Jamieson can be reached at firstname.lastname@example.org
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