Canada Markets

Spring Wheat Futures Reach Contract Lows

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
@CliffJamieson
Dec MGEX HRS lost 4 1/4 cents on Tuesday to close at $5.16 per bushel (bu), reaching a fresh contract low. The continuous December chart shows little in the way of chart support down to the weekly lows reached in Aug/Nov 2019 of $4.86 1/2 to $4.88/bu. The lower study shows commercial traders growing their net-long futures position as of July 28 (green bars), while noncommercial traders grew their net-short position (blue bars). (DTN ProphetX chart)
Dec MGEX HRS lost 4 1/4 cents on Tuesday to close at $5.16 per bushel (bu), reaching a fresh contract low. The continuous December chart shows little in the way of chart support down to the weekly lows reached in Aug/Nov 2019 of $4.86 1/2 to $4.88/bu. The lower study shows commercial traders growing their net-long futures position as of July 28 (green bars), while noncommercial traders grew their net-short position (blue bars). (DTN ProphetX chart)

MGEX spring wheat for September delivery lost 4 3/4 cents in Tuesday's trade (not shown), taking out the July 20 low to reach a fresh contract low of $5.01 1/2 per bushel (bu), while closing at $5.01 3/4/bu. The last near-test of the $5/bu level is seen on the continuous active chart when price dipped to $5.00 3/4/bu on Nov. 20 (not shown). From Aug. 30 to Sept. 3, 2019, the daily close dipped from $5.01 1/2/bu to a low of $4.87/bu on Sept. 3, while returning above $5/bu from Sept. 10 on.

The Dec contract reached a fresh contract low for a second day, closing down 4 1/4 cents to $5.16/bu. Turning to the attached chart, the continuous December chart weekly, there may be little to stop a continued slide to the lows of $4.86 1/2 and $4.88/bu reached in August and November 2019, respectively. While not shown, stochastic momentum indicators are in oversold territory on both daily and weekly charts, which may act to limit further noncommercial selling.

It is interesting to note the histogram bars on the lower study. The green bars show commercial traders adding to their bullish net-long position in spring wheat in four of the past five weeks as of July 28, now showing the largest bullish position held in eight weeks.

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At the same time, the blue bars show noncommercial traders adding to their bearish net-short position for a fifth straight week over this period, now holding the largest bearish position in nine weeks, while slightly less than 5,000 contracts away from the record net-short position of 22,979 contracts held on May 19.

Looking at this, one could be led to believe that something has to give, while one could also assume that it is the commercial side that is on the right track, which could lead to sudden short-covering and higher prices.

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

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Dec MGEX HRS lost 4 1/4 cents on Tuesday to close at $5.16 per bushel (bu), reaching a fresh contract low. The continuous December chart shows little in the way of chart support down to the weekly lows reached in Aug/Nov 2019 of $4.86 1/2 to $4.88/bu. The lower study shows commercial traders growing their net-long futures position as of July 28 (green bars), while noncommercial traders grew their net-short position (blue bars). (DTN ProphetX chart) 
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