Technically Speaking

September Chicago wheat prices that rallied in late April and May on reports of adverse weather in Europe, Ukraine and Russia collapsed in June and July, falling to $5.14 1/4 on July 29, the lowest September price in nearly four years and well below USDA's average farm price estimate of $5.70 a bushel. Technically speaking, the 20-day average described both the early uptrend and then the subsequent downtrend well as prices first closed above the average on April 22 and then below the average on June 2, serving as resistance until recently.

On a weekly chart, September wheat posted a bullish weekly reversal for the week ended Aug. 2 and followed that with a weekly close at $5.42 1/2 on Friday, Aug. 9, ending above the 20-day average for only the second time since prices turned lower in June. Earlier, a low of $5.48 from September 2023 had served as support until prices broke below that level on July 15, 2024. Prices have not followed through much since, which makes me wonder if long-term support has finally arrived. The catch, however, is that prices have not been able to break above any significant resistance and Monday's lower start suggests a change -- wheat is not yet ready for a change in trend.

When prices are in an obvious downtrend and reach a fundamentally cheap price level, as Chicago wheat prices have, the first signs of a bullish change in the market are usually bullish price responses to attempts at new lows. The bullish weekly reversal ending Aug. 2 was the first example of that and it looks like wheat prices will need more. However, at these cheap prices, the days of letting new lows go unchallenged may be over.

September Chicago wheat has not yet broken above resistance at the recent high of $5.56 1/4, so we can't officially say the downtrend is over. Monday's WASDE report will have new wheat estimates and an increase in U.S. wheat production is likely, so support at the July low of $5.14 1/4 may be challenged again. The important thing will be to notice the market's responses to any attempts to trade at new lows.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

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

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