Canada Markets

Wheat futures across the three exchanges fell back from or near double-digit gains to end today's session on a mixed note, with modest gains seen across all contracts, except for the July and September hard red winter wheat contracts. Wheat markets failed to share the enthusiasm that drove soybeans (and to a lesser extent corn) futures higher for the second consecutive day. All three wheat markets are currently showing losses this week through the end of Wednesday's trade, despite the reports of excessive rains in areas of the U.S. and limited relief in the western Prairies.

Commercial selling is noted in the red wheat futures in recent days, more pronounced in spring wheat futures. As seen in the lower study of the attached chart, the July/September, September/December and December/March contracts spreads weakened or added carry today, a sign of commercial selling.

The weekly crop condition for the U.S. spring wheat crop was reported at 70% Good to Excellent as of June 14, 1% higher than the previous week, 2% below last year and 4% below the five-year average for the same period. At the same time, DTN forecasts include favorable rains for the northern plains in the U.S. with showers across the Canadian prairies suggested for the next week or longer.

CFTC data shows commercial traders have held a net-long futures position over the past nine weeks, with a net-long position of 2,639 contracts as of June 11, down from the May weekly high of 4,348 contracts. Continued commercial selling could see this number pared further as those closest to the physical commodity become increasingly confident with this year's prospects. Commercial traders have only held a net-long position of HRS futures contracts for 26 weeks over the past two years, as indicated by historical CFTC data on ProphetX. During this period, the largest net-long recorded was 5,379 contracts during the week of August 4 2013 while the largest net-short position was recorded at 20,749 contracts as of the week of May 11 2014.

Given this scenario, further pressure could come to the market. As seen on the attached December daily chart, today's activity could be viewed as bearish, given the formation of a doji candlestick, with today's open almost identical to today's close, while near the lower end of the session's 9-cent trading range.

Further weakness could result in a test of the lower end of the upward-sloping channel at $5.61/bu, while the double-bottom formed at $5.55 1/4 and $5.56 in late May/early June could also be tested. The contract low on the December contract stands at $4.47 1/4/bu.

We will soon be having an article highlighting what we're hearing from our Canada Crop Connection volunteers (similar to the feature DTN Managing Editor Cheri Zagurski has been doing with mainly our U.S. readers). If you'd like to participate through the season, please email DTN's Associate Managing Editor Elaine Shein at elaine.shein@dtn.com. Occasionally we will send you questions by email to get your viewpoint on various issues affecting Canadian agriculture. We also welcome any pictures you wish to send us from the field -- show us what's going on with your crops, as well as feedlots and pastures. Let us know firsthand what you're doing and seeing, as well as what issues are on your mind throughout this year. We look forward to hearing from you (and thanks to those who already have volunteered!)

DTN 360 Poll

This week's poll asks what you think about the consultation process in Saskatchewan regarding who should and should not be allowed to own farmland. We'd love to know what you think on this matter. You can weigh in to our poll found at the lower right of your DTN homepage.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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