All three wheat markets will end the week showing an uptrend on their weekly charts, given moves higher than last week's high achieved over the past four sessions, although all show troubling signs. Thursday's trade saw both soft red winter and hard red winter wheat futures showing a bearish outside-day trading bar on their respective daily charts, trading both higher, then lower than Wednesday's trading range while closing near the lower-end of today's trading range.
Spring wheat futures led the move to the downside today, with the most active May contract ending 14 cents lower, while finishing below the contract's 20-day moving average at $5.58 3/4/bu. While the spring wheat contract did not end with an outside day trading bar this session, it is on the verge of producing this signal on the weekly chart (not shown). While this week's low is currently $5.54 1/2/bu. reached in today's trade, a move below last week's low of $5.51 3/4/bu. in Friday's trade with a close closer to the lower-end of this week's trading range would signal a bearish reversal on the weekly chart.
The attached continuous active daily chart would point to potential support at $5.53 3/4/bu., the 33% retracement of the move from the contract's August low through January high, while the 38.2% retracement lies below at $5.48/bu. A breach of this level could result in a further slide to the 50% retracement at $5.35/bu., which would also signal a breach of the long-term upward-sloping trendline at $5.39/bu.
The middle study points to the weakening of the continuous HRS/HRW spread, which reached a high of $1.35 1/2/bu. on Dec. 1 (HRS over HRW), although has since slid to a 98-cent premium, the weakest level seen since Nov. 25 and below the $1.05 1/2 average seen since the Aug. 1 crop year began.
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The lower-study points to the March/May and May/July spreads, which both traded as bullish inverse at one time but are now shown to trade at a carry with the May trading over the March and the July over the May. This is a signal of bearish commercial activity. The nearby March/May spread has weakened 8 cents so far this week, while the May/July has weakened 5 cents.
Another sign of weakness is basis. DTN's National Average Spring Wheat Basis was reported at 40 cents under the May on Wednesday evening, which is much weaker than the five-year average of 15 cents under. The Canadian prairie CWRS basis is calculated at 65 cents over the May future, the weakest reported since Oct. 3.
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Cliff Jamieson can be reached at email@example.com
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