The May spring wheat contract has traded within a 22 3/4 cent trading range over the past 11 sessions, ranging from a high of $6.36/bushel on March 1 to $6.13 1/4/bu on March 9. After failing at resistance of the contract's 100-day moving average at $6.28 1/2/bu this session for the sixth time in the 11 sessions, a combination of commercial and noncommercial selling interest drove price to the lower end of the range traded over this period.
The brown line in the first study shows a modest weakening of the May/July spread on Thursday to minus 6 3/4 cents (July closing over the May), although so far over the week, this spread has strengthened or narrowed by 1 1/4 cents, suggesting speculative selling is behind this week's weakness. As seen in the blue bars of the histogram in the lower study, noncommercial traders substantially increased their bullish net-long position in spring wheat futures to 2,768 contracts as of March 5 data, the largest bullish position held in seven weeks. It could be a case of buyers' remorse as selling by this group weighs on prices this week.
Unlike the move into a downtrend seen in winter wheat markets, the weekly HRS chart points to prices consolidating in last week's trading range so far this week in a sideways move, the second consecutive week of sideways trade.
Thursday's data releases included mixed data for the spring wheat growing areas of the United States. Conditions are improving in Montana, while most of North Dakota is facing some degree of moisture deficit, with a shift seen from D1 or moderate drought to D2 or severe drought over the past week. At the same time, the Climate Prediction Center in the U.S. released a three-month seasonal outlook that points to wetter-than-normal conditions for much of the Northern Plains for the April/May/June period.
Canada's Drought Monitor shows persistent D3 or extreme drought centered around the Regina area, with much of southern Saskatchewan and Manitoba along with central Alberta facing moderate-severe drought as of February 28.
Cliff Jamieson can be reached at email@example.com
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