While North American wheat markets continue to hold above fall lows, European milling wheat for December delivery broke down today to signal what may lie ahead.
The December Euronext contract closed EUR 3.50/mt lower at EUR 228.25/mt, reaching its lowest close since July 12 on the continuous active chart, or more than four months and the lowest close since June 1 on the December chart.
Since reaching its recent high of EUR 268.75/mt in July, the December contract has rallied off of lows reached at least once each month since, reaching a series of lower highs and lower lows. The most recent rally from the Oct. 31 low to the Nov. 8 high saw the 23.6% retracement of the move from the July high to October low tested at EUR 238/mt, although failed to sustain the move.
As seen on the first study, stochastic momentum indicators have fallen short of reaching oversold territory in selloffs seen on three occasions since September. These indicators have rolled during this week and we will soon see if prices will reach oversold territory.
The brown line on the lower study shows the Dec/March contract spread weakening EUR 0.75/mt today to minus EUR 5.75/mt, the weakest spread reached this month.
Official FranceAgriMer data has revised their forecast for the country's soft wheat exports outside of the E.U. by 300,000 mt, while raising the country's ending wheat stocks to a six-year high at the end of the 2023-24 crop year.
At the same time, Black Sea analyst SovEcon sees the Russian wheat market stabilizing, with open sales as of Nov. 14 at 2.4 mmt, up 500,000 mt from a month ago as business increases.
Cliff Jamieson can be reached at email@example.com
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