Technically Speaking
Darin Newsom DTN Senior Analyst

Tuesday 11/27/12

July KC Wheat Growing More Bullish
The July Kansas City wheat contract is gaining bullish momentum despite its already high price.[Read Full Blog Post]
Posted at 10:39AM CST 11/27/12 by Darin Newsom | Post a Comment
Comments (3)
After posting this blog, I went back and took a look at the 5-year seasonal index for the DTN National HRW Index (national average cash price). Seasonally the HRW cash market tends to post a low around the close of the fourth week of November, last week, before rallying through its seasonal high the close the first week of March. The seasonal index tends to gain about 19% over the course of its rally. Using last Friday's (November 23) calculated HW.X of $8.32, the national average cash price would be projected to rally to almost $9.90. The seasonal index for the futures market projects a rally to near $10.10, implying a natinoal average basis of approximately 20 cents under, much stronger than the five-year average 67 cents under.
Posted by DARIN NEWSOM at 11:42AM CST 11/27/12
any follow up thoughts after the melt down the past couple of sessions.........looked like a key reversal on July wheat yesterday followed up with more weakness today.
Posted by JeremeyFrost at 9:55PM CST 11/30/12
Good question Jeremey. I took another look at the weekly chart this morning (Saturday, Dec 1) and it still looks bullish. The July KC contract posted a high this past week of $9.45 3/4, giving the chart a triple-top look near $9.50. As the old saying goes, triples are usually taken out. Market volatility remains low near 12%, usually an invitation for noncommercial buying, though Friday's CFTC report showed this group liquidating another 1,000 contracts of their net-long futures position (as of Tuesday, November 27). The carry in both the July/Sep and July/Dec KC spreads continues to weaken slightly, indicating light commercial buying interest. And the seasonal index remains bullish through at least early March. All in all, factors add up to a still bullish new-crop wheat situation. Thanks for your comments.
Posted by DARIN NEWSOM at 7:42AM CST 12/01/12
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