CNS Canada — All three U.S. wheat futures markets have posted good gains in recent weeks, after touching contract lows at the end of January.

With improvements of 80 cents to a dollar per bushel off of the lows for Minneapolis, Kansas City and Chicago futures, wheat is now in neutral territory from both a fundamental and a technical standpoint, according to an analyst.

“We’re at a fundamentally neutral price, whereas a month ago we were severely oversold and undervalued compared to global prices,” said Austin Damiani of Frontier Futures in Minneapolis.

Whether there is more room to the upside will depend on what hedge funds want to do, he added.

Fund traders are holding large short positions in wheat, and while they have covered some of those positions in recent weeks, Damiani was uncertain what they would do next.

“It will depend on the charts and the technical signals they get,” he added.

Both the Kansas City and Minneapolis futures have posted a 50 per cent retracement over their January decline, which was a technical objective to the upside that has now been met.

“Now we’re pausing, and will see what we’ll do next,” said Damiani, noting that money flow needs for the fund traders will be a feature.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.