Canada Markets

December MGEX spring wheat reached its highest trade in nine sessions on March 25, although a reversal pattern resulted in a 1 1/4-cent loss for the session.

March 26 trade resulted in a second lower close, with the new crop contract ending 10 cents lower at $6.76 1/4 per bushel (bu). This session's trade resulted in a close below the contract's 20-day moving average, calculated at $6.81 1/4/bu (red line), while also breached a short-term trendline drawn from the contract's March 6 contract low of $6.65 1/2/bu.

Recent trade perhaps signals a head-and-shoulders chart pattern, with a left shoulder seen from March 1-8, the head on March 12 and the right shoulder reaching a high on March 25. The measuring ability of this pattern is determined by the distance from the neckline or upward sloping trendline to the top of the head, or 28 1/4 cents, which would be equal to the drop in price from today's breach of the trendline. This study would indicate a target or fresh contract low of $6.51 1/4.

The blue histogram bars on the lower study show noncommercial traders increasing their bearish net-short position in spring wheat over the week ending March 20, while for the first time in four weeks. The speculative trade has perhaps signaled further desire to trade this market from the short side during this week's trade.

It is interesting to note that this activity is seen ahead of Thursday's USDA reports, with spring wheat stocks forecast to rise year over year as of March 1, while the average of Dow Jones pre-report estimates pointing to a 300,000-acre drop in spring wheat acres seeded in the U.S. in 2024.

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

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

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