Commentary
Chicago wheat futures led the way across the complex as they posted a higher close for six sessions consecutively amid a 38-cent rally off the recent low. The close today in WH24 cleared some important technical levels in my view. March wheat on the daily chart closed above the 50- and 100-day moving averages which may have ignited further short covering amid stop losses being initiated. Where to from here? There is some rumor this week about further Chinese buying, which means tomorrows export sales will be scrutinized. That said there has been no shortage of geo-political news highlighted by a Russian military transport plane shot down with 74 people aboard. Ukraine is said to be responsible. It is important to note that rallies off of geo-political uncertainties in Eastern Europe have become selling opportunities on the Board. We shall see if that trend continues. While this recent rally is bullish technically, US values are building back a premium to Russia with HRW (KC Wheat) at a FOB $40 per metric ton over Russia. It is my belief one should watch open Interest tomorrow; it was near flat today and a decline in open interest would indicate to me that funds are short covering. I included a weekly continuous chart below. Weekly technical levels through next week come in as follows. Key support is 5.97 (5 % down for year) and then 5.93 the 21-week moving average. Then trendline support at 5.90 and 5.80. Under 5.80 and we move to 5.66 in my view. Resistance isn’t seen until 6.28. That is where we closed 2023. Any sustained rally means we need to trade higher on the year in my view. Above 6.28 and the next levels are trendline resistance at 6.43, 6.53, and a 50% retracement from the July 23 rally to the Sept 23 low at 6.59.
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