Canada Markets

While pondering a customer call today asking when spring wheat would finally bottom and signal a change of direction, a tweet came across the airwaves titled Word to the Wise, which suggested "There is a big difference between the end of a bear market and the beginning of a new bull market."

Today's 6-cent move was the largest daily move higher since August 22, while the trading range generated in today's trade was both higher and lower than Friday's high and low, respectively, which results in a bullish technical signal called an outside day given the close at the higher end of today's trading range, which can signal a short-term change in direction.

Positive signs come from the fact that support is coming from both sides of the market. Shown in the lower study in this graphic, the noncommercial net-long position increased for the fourth consecutive week to 10,772 contracts as of the most recent data for the week ending September 23, the largest net-long position held in the past 13 weeks. Futures spreads also narrowed this session, indicating commercial support and perhaps a growing demand for protein wheat given quality issues found across various global crops.

Despite the favorable signals, a move to an uptrend may be a stretch given the bleak global fundamentals, which includes a record-sized global crop close to 720 million metric tonnes.

Nearby technical resistance includes the 10-day moving average at $5.43 1/4/bu, last week's high at $5.44 3/4/bu as well as the 20-day moving average at $5.72/bu.

Also of interest is a cross-over of the short-term stochastic indicators as seen in the middle study, which is a bullish signal given the over-sold nature of the spring wheat market. Only time will tell if these indicators will continue to trend.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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