December MGEX spring wheat reached a higher-high for a fourth straight session, closing higher for a fourth time in five sessions. Today's move saw the December contract reach a high of $7.40/bushel held USD, the highest trade in 12 sessions.
Trade fell short of testing the contract's October high of $7.46/bu and the contract's 50-day moving average at $7.44/bu (blue line). The December contract has failed to close above or even test the contract's 50-day moving average since early August, or over three months.
Wednesday's trade saw daily volume of 9,898 contracts traded in the December contract, the largest daily volume seen since Sept. 29 while the second-highest daily volume seen during the life of the contract.
The focus this week is placed on Thursday's USDA report, while the average of pre-report estimates indicates that little is expected in this report for wheat.
As of the week ending Oct. 31, the noncommercial net-short position futures position for hard red spring wheat has increased for 10 consecutive weeks to a record 26,722 contracts net-short (middle study), which is 16.3% higher than the previous record net-short reached in May 2020. In the week ending Oct. 31, the total noncommercial short position increased by 3,402 contracts to a record short position of 34,444 contracts, 2% higher than the previous record reached in August 2020.
At the same time, the brown line on the first study shows the Dec/March futures spread strengthening or narrowing by 4 cents so far this week to minus 14 1/2 cents, the narrowest spread or smallest carry reported since Aug. 23, or more than two months. This hints of a less-bearish approach to trade or view of market fundamentals, after reaching a low of minus 25 cents on Oct. 3.
Cliff Jamieson can be reached at firstname.lastname@example.org
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