Technically Speaking

Chart Analysis: U.S. Wheat Futures

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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Winter wheat prices have protected much of their 2018 gains so far, but last week's lower close in the March Kansas City contract looks like a bearish change of momentum. (DTN ProphetX chart)

K.C. Wheat: March K.C. wheat futures fell 14 1/2 cents last week to $4.94 1/4, their lowest close so far in 2019. Futures prices remain in the same narrow sideways trend we have seen since they made a low of $4.82 1/4 on November 27. However, a look at the weekly chart for spot futures prices shows last week's action resulted in a bearish outside reversal, threatening to leave behind a third lower high since prices peaked in early August. The weekly stochastic indicator also showed a bearish change in momentum with Friday's lower close. Fundamentally, there is not a lot happening for wheat prices this time of year, but U.S. demand continues to struggle and the early outlook for world production in 2019 is apt to lean bearish.

Chicago wheat: March Chicago wheat fared a little better than K.C. last week but was also down by Friday, losing 7 cents to $5.17 1/4. The weekly stochastic also looks a little bearish for spot Chicago prices, but in this case, there is no outside bearish reversal and prices seem to be doing a better job of holding sideways, at least for now. Fundamentally, the SRW wheat region was vulnerable to January's polar vortex, followed by heavy precipitation in areas. Recently, 120,000 metric tons of U.S. SRW wheat earned a sale to Egypt. On Friday, USDA estimated all winter wheat seedings at 31.3 million acres, the lowest since 1909.

Minneapolis wheat: Like Chicago, March Minneapolis wheat was also down 7 cents last week, finishing Friday at $5.68 1/2. Technically speaking, among the three U.S. wheats, Minneapolis wheat has the most bullish clues lurking below the surface: speculators are net short, commercials are net long and the March contract is priced within a half-cent of the May. However, above the surface, March futures prices are sideways as they stay below the January high of $5.80. The weekly chart of spot Minneapolis futures prices has been chopping sideways to lower since August, not tipping its hat to any particular direction yet.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grains and grain futures involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman

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