Technically Speaking

Chart Analysis: U.S. Wheat Futures

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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The weekly chart above shows while March Chicago wheat prices have been trading roughly sideways since 2017, net positions among commercials and noncommercials have been diminishing in size and were roughly neutral before the latest rally (DTN ProphetX chart).

Chicago wheat: March Chicago wheat closed up 23 cents during Thanksgiving week, ending at $5.41 3/4, a new four-month high. It's not typical for wheat to surge higher in a year when USDA estimates world ending wheat stocks at a new record high and especially not on a holiday week in November when wheat prices typically don't have much to talk about. With noncommercials largely neutral, the latest rally in Chicago wheat prices appears to be a legitimate display of domestic demand for SRW wheat supplies that are lower than usual after adverse weather in 2019. The next level of resistance to challenge Chicago wheat's rally is the 2019 high of $5.73 1/2.

KC Wheat: Finding bullish encouragement from Friday's rally in Chicago wheat, March KC wheat closed up 13 3/4 cents last week, finishing at $4.47. The close put prices right next to the old three-month high of $4.49 1/2, but even with help from Chicago wheat, it is difficult for noncommercial traders to believe in higher KC wheat prices and they remained slightly net short as of Nov. 19. Fundamentally, there is no significant bullish argument for KC wheat prices, but technically, 12-year support at $4.00 remains a difficult obstacle for short sellers betting on lower prices. Given the current predicament, a sideways trend seems likely this winter.

Minneapolis Wheat: March Minneapolis wheat finished the week up 7 3/4 cents at $5.14 1/2, but is currently the most bearish behaving of the three wheats. Prices are not only near their lowest levels of 2019, but are also among the lowest level March prices have traded at in 12 years. Like KC wheat, there is no significant fundamental reason to expect higher prices. The most bullish thing to say for Minneapolis wheat is that noncommercial traders are net short near prices where support has held for 12 years and is not likely to give way soon. Technically speaking, the monthly stochastic is oversold and it would not take much to turn the trend higher, but there is no sign of that happening 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 @ToddHultman1

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