A nine-day slide in both the HRS and SRW markets took a pause today with a 4 3/4-cent gain in both markets (nearby September contracts). Over the past few days, we've seen commercial buying interest support prices, more obvious on the SRW spread charts, but also showing up in the spring wheat market with the Sept/Dec spread narrowing 1 cent in the past two days.
This move took place as the September price neared a test of its May 29 low at $5.41 per bushel with the May 5 contract low at $5.33. Last week's weekly close on the September contract of $5.74 3/4/bu. was in the lower 8% of the price range traded on average for that week over the past five years according to DTN's Price Probability charts. Given this week's slide and that DTN's five-year Seasonal Index charts indicate that spring wheat tends to rally through the end of July, it may be safe to say that this week's close will continue to be near the lowest seen in the five-year period, providing increased incentive for commercials to increase buying. At the same time, the best changes for a change in trend will arise from increased non-commercial buying activity.
Support also came from weekly export data in the U.S. where both weekly sales and shipments were above the weekly volume needed to reach annual export targets, with DTN analysis suggesting this "could be viewed as bullish." Year-to-date volumes still remain well below the cumulative pace needed to reach target.
Canadian producers remain blessed due to the impact of recent Canadian dollar weakness. While Wednesday's DTN National Average Spring Wheat Basis was reported at 51 cents under the September future, my prairie-wide average basis for CWRS was calculated at 58 cents over the September. The spot prairie basis is up from 44 cents over in early July and 23 cents over on June 1, based on available internet quotes.
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Cliff Jamieson can be reached at email@example.com
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