Technically Speaking

Chart Analysis: US Wheat Prices

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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The chart above of weekly December Minneapolis wheat prices shows commercials responding favorably to spring wheat near its lowest prices in over two years. The market is oversold and it will be interesting to see if a price reversal is near. (DTN ProphetX chart)

December Minneapolis wheat:

December Minneapolis wheat closed down 4 cents last week at $5.30 3/4, near its lowest prices in over two years while fundamentals look bearish. USDA's latest estimates expect 323 million bushels of U.S. HRS wheat ending stocks in 2019-20, the most in over 10 years at a time when world wheat production is also expected to set a new record high. Technically, however, December Minneapolis wheat prices have been falling for 25 months and are technically oversold, attracting commercial interest on the long side of the market. With the weekly stochastic below 20 and both noncommercials and managed futures funds holding record net-short positions, conditions are technically ripe for a bullish reversal.

December Chicago wheat:

December Chicago wheat gained back a dime last week, ending at $5.01 1/2 and near its 100-day average. Prices ended July on a bearish note, breaking to a new two-month low and remaining under pressure from a bearish outlook for world wheat production. However, more locally, USDA estimates 9% less U.S. SRW wheat production in 2019, hurt by an excessively wet spring. Cash SRW wheat prices remain above the September futures contract in the eastern Midwest, confirming strong local demand and helping keep the Chicago wheat contract from falling further. Technically, December Chicago wheat is trading in the middle of a wide, sideways trading range and should hold above the May low of $4.42 1/4.

December Kansas City Wheat:

December KC Wheat fell 5 1/4 cents last week to $4.33 1/2 on Friday, not far from its 2019 low of $4.14. U.S. HRW wheat largely escaped this spring's weather problems, and USDA estimates a 21% production increase from a year ago. Expectations for a record world wheat crop also do not bode well for KC wheat prices from a fundamental view. Technically, December KC wheat prices are at the low end of their five-year range where support is often found. However, there are no signs of support emerging yet, either from the weekly stochastic indicator or among commercial positions that were slightly net-short as of Aug. 6.

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

(BAS/CZ)

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