Canada Markets

The March MGEX hard red spring wheat contract reached a fresh low for the week, trading below $7/bushel for the second time during the life of the contract while recovering to close at $7/bushel (bu), down 7 3/4 cents for the session. Today's close was only 1/4 cent higher than the $6.99 3/4 close reached on Nov. 27, while today's low of $6.99/bu is only 1 1/2 cents higher than the contract low reached on Nov. 27. A breach of this support could lead to further selling.

The continuous active chart attached provides some insight as to what may happen should this support be breached, with the next weekly low support on this chart pointing to a May 2021 low of $6.68 3/4/bu and the March 2021 weekly low of $5.96 1/4/bu potential support levels should price fail to hold above nearby support.

The blue histogram bars on the lower study shows the noncommercial or speculative net position held, last reported as of Jan. 2. As of Jan. 2, the noncommercial short position of 25,603 contracts is seen as the smallest bearish position held over three weeks, although the range over three consecutive weeks is a mere 204 contracts. While this data will be reported for the week ending Jan. 9 on the afternoon of Jan. 12, the latest position held is only 2,194 contracts below the record net-short position held in November of 27,797 contracts.

The January International Grains Council report includes a 3.9 million metric ton (mmt) increase in the estimate for global wheat production for 2023-24, with the largest increases seen for Canada (2.2 mmt), Australia (1.1 mmt) and Argentina (300,000 mt). Global use was left constant at 804 mmt and ending stocks were revised 2 mmt higher from its November estimate to 266 mmt. The IGC views this as a five-year low, down 5.7% or 16 mmt from 2022-23, while it remains 8 mmt higher than the current USDA forecast.

The IGC's outlook for 2024-25, perhaps the first look ahead across the industry, indicates that yield improvements will help compensate for a smaller area planted and global production may increase over the next crop year. Global consumption is forecast to remain steady, while global wheat stocks are expected to tighten to a six-year low.

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

Follow him on X, formerly known as Twitter, @CliffJamieson.

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