Canada Markets

European milling wheat for March delivery formed a bearish gap lower at this week's open, although the gap was filled later in the session. The contract closed EUR 1/metric ton lower at EUR 213.75/mt for a second consecutive daily loss, while taking out the January low to reach a fresh low in the contract's downtrend at EUR 213/mt.

This move follows a failed attempt to sustain a move above the contract's 20-day moving average during each month from August through December 2023 and most recently on Jan. 25.

The attached chart is the continuous active chart, which shows today's low being the weakest trade seen since the week of July 26, 2021. Potential support lies at a double bottom of EUR 211.50/mt, psychological support at EUR 200/mt and a weekly low at EUR 196.25/mt and again at EUR 193.50/mt.

This weakness is seen despite European commentary reporting favorable activity for wheat movement at French ports although Russian prices continue to challenge this market. The lower study on this chart shows the March/May futures spread strengthening from a weekly close of minus EUR 5.50/mt in late December to minus EUR 1.50/mt today, signaling a bullish response, likely due to commercial activity. This is the narrowest spread seen since late July.

Today's move was perhaps triggered by bearish fundamental data released by the European Commission, which revised their soft wheat stocks for 2023-24 higher by 700,000 mt to 19.1 mmt, close to the 19.4 mmt carried out of 2022-23. The USDA's January WASDE has pegged E.U. stocks of all-wheat at 15.32 million metric tons, a forecast that could face an upward revision in the coming months.

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

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

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