Canada Markets

Can HRS Move Against its Seasonal Trend?

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The Minneapolis Wheat Five-Year Seasonal Index chart shows a tendency for prices to trend lower into mid-August, with the start of the leg lower taking place in the current week, on average, as seen by the blue line. The red line shows the current trend in the front-month contract. (DTN graphic by Scott Kemper)

A continued short-term uptrend trend in Minneapolis hard red spring wheat could be viewed as a counter-seasonal move, which may have a bearing on the ability for a sustained move higher.

The July HRS wheat daily chart (not shown) shows a bullish outside day trading bar formed June 1, which signaled a change in direction for the market, while the contract has rallied 35 1/4 cents so far this month to a near-test of the April high of $5.60 1/4 per bushel. Leading the move in the wheat market is the SRW wheat contract, which saw Wednesday's rally take out the April high to reach the highest level seen since November while gaining 55 cents so far this month.

A sustained move higher for the HRS market would prove to be counter to the typical seasonal move, as shown on the attached chart. On average, the five-year seasonal trend (blue line) tends to move lower from the current week into mid-August.

Looking at the past five years (2010/11-through-2014/15) on the continuous active chart, the average percent change in price over the month of June showed a negligible gain of .02%, with wheat prices on the monthly chart falling in three of the five years over the month of June.

Considering the percent change in price over the month of July, the average move was 2.8% lower, with the monthly move showing a loss in three of the five years, which also happen to be seen in the past three years. Over the two-month June/July period, prices fell an average of 3.2% over the past five years, while falling in four of the five crop years. The smallest two-month loss was seen in 2014/15 of 1.4%, while the largest two-month loss was seen in 2010/11 of 19%. The one year where prices did rally in June/July was seen in 2012, when prices rallied 26.7%.

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

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