As seen on the attached chart, Minneapolis wheat futures retraced just below their 67% retracement of their May through July rally to reach a low of $8.30 per bushel earlier this month. Markets have since rallied, although this week's trade stalled or consolidated in sideways motion, within the range of the previous week's trade.
This week's trading bar represents an inside week or inside bar, with this week's trading range or bar entirely encompassed by the trading range of last week's bar. Given the fact that this week's trading range almost equals that of last week, this close should not be of concern but simply represents a balance between buyers and sellers. This can also be seen in the fact that this week's close was roughly at the midpoint of this week's trading range.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT T
Weekly stochastic indicators show a bullish cross-over taking place the week of Jan. 7, with the faster %k line (blue line) crossing the %D line (red line). It would appear the momentum remains to the upside, although the red line remains in over-sold territory, or below 20.
Previous weekly highs may act as resistance for Minneapolis wheat, at $8.82 1/4 per bu and at $8.85 per bu. Next is the 38.2% retracement of the July through January downtrend, which is at $9.08 per bu. This is the period of seasonal strength for hard red spring wheat, with the five-year seasonal index pointing toward an approximate 22% gain over the next four weeks to reach the seasonal high for the entire year. Only time will tell whether this seasonality will affect this year's price behavior.
Week 25 Canadian Statistics showed a surprising surge in wheat shipments. Canada's all-wheat movement (wheat and durum) are now moving at a pace of 6.8% ahead of last year, up from 4.9% the previous week. This is despite lengthy delays in loading at the Vancouver port due to excessive rainfall.
U.S. wheat exports reported Friday were viewed as neutral to bearish. Overall sales were higher than expected by the trade, and the market action showed that there are indications that wheat sales are turning the corner, with foreign demand to rely heavily on North American stocks for the upcoming months. Unfortunately, actual shipments remain well below the level required to meet USDA's annual sales projections, which adds a bearish tone to the report.
Cliff Jamieson can be reached at email@example.com
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