CNS Canada — U.S. wheat futures have posted large losses over the past three weeks, but will be watching corn to provide some further direction in the near future, according to a wheat broker.
The U.S. Department of Agriculture releases a number of closely watched reports on Monday (Jan. 12), including winter wheat seedings, quarterly stocks and its latest supply/demand projections.
However, “the most important number for direction (in wheat) will be the corn stocks number,” said Austin Damiani of Frontier Futures in Minneapolis.
“We often get a surprise in these quarterly stocks reports… making it hard to make a prediction.”
While wheat has already backed off considerably from its recent highs, he noted corn is still relatively close to the top end of its range and speculators are holding large long positions in the grain.
It’s hard to predict the reaction to the report, but from a technical standpoint Damiani said the Chicago March wheat contract was facing support at around $5.55 per bushel, which would mark the 50 per cent retracement level from the September to December rally (all figures US$).
CBOT March wheat settled Thursday at $5.67 per bushel.
For Minneapolis spring wheat, the March contract finished right around major support Thursday at US$6.085 per bushel, which could set the stage for a test of the next support at $6 per bushel.
However, the front month closed above the nearby Kansas City (KC) contract for the first time in months, which should be seen as somewhat supportive, according to technical analysts.
KC March wheat, now traded in Chicago, settled Thursday at $6.0775. Minneapolis traditionally trades at a premium to KC wheat, but has been softer for most of the past year.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.