Technically Speaking

Do or Die for Minneapolis September Wheat?

Dana Mantini
By  Dana Mantini , Senior Market Analyst
The chart above is a daily chart of Minneapolis September wheat. It appears to be an ascending triangle pattern, close to breaking out. (DTN ProphetX chart by Dana Mantini)

MINNEAPOLIS SEP/DEC WHEAT FUTURES:

With the ongoing Northern Plains drought, Minneapolis new-crop wheat futures have been firm for the last few months. Early Sunday night, Minneapolis was again challenging the high, being only 12 cents below that. Minneapolis September and December appear to be forming ascending triangle patterns. A breakout above would signal much higher prices ahead. The interesting thing is that on Monday, Stats Canada will be out with their updated forecasts for both spring wheat and canola. Expected to be sharply lower, the wheat estimate could be the fuel that sends Minneapolis to new heights. A rally and close above $9.50 on September would likely be the start of a new leg higher. For December, a close above $9.38 could have the same bullish impact.

NOVEMBER CANOLA FUTURES:

November canola futures have much the same pattern as Minneapolis September wheat, only it's more of a symmetrical triangle versus an ascending triangle. However, much like Minneapolis wheat futures, a breakout and close above C$950 would likely lead to another leg higher. It is interesting to note that canola may also get a cue from the Stats Canada report on Monday, and just like wheat, expectations are for a sharply lower canola production number. I would guess a production number south of 14.5 million metric tons (mmt) to 15 mmt may be enough to get canola to resume the sharp move higher, as world veg oil supplies remain tight.

U.S. DOLLAR INDEX:

The U.S. Dollar Index, after an impressive rise in the last few months, finally began a correction to the downside and has closed lower for six of the last seven days. With recent statements from the Federal Reserve that they may not begin to raise interest rates until 2023, the dollar has been on a downward slide. The dollar index is close to breaking under the 50-day moving average of 92.55, and a close below that would likely be bearish. A bearish dollar would be bullish for ag commodities.

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

Dana Mantini can be reached at: Dana.Mantini@DTN.com

Follow Dana on Twitter @mantini_r

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