Weekly Market Analysis: Wheat Trend Starting to Turn

Wheat futures started the week on a strong note respecting the trend established the first of the month. The December Kansas City wheat contract has traveled 85 ½ cents off the lows since the first of the month. A down trending U. S. dollar and a higher corn prices supported the wheat market. In addition, the funds have been a buyer of wheat since the first of the month. This outside interest in wheat is the major bullish factor for wheat.

 

Traders have pushed aside the negative fundamental factors. Current supplies of wheat in the United States and the world are large. Competition for world wheat demand is coming from the Black Sea Region, France and Germany. In fact, Egypt bought 175,000 metric tons of wheat this week from these three countries. With the recent rally in wheat, our price was above these three countries.

The wheat market saw selling pressure the last two days of the week. Some of the pressure came from the unwinding of wheat versus corn spreads. The rest of the selling came from logs taking profit. The early trend following indicator have crossed to the down side. If wheat traders trade fundamentals, the price will work lower. If the funds return and defend their position, wheat will work higher. The question is who will show up on Monday in the wheat pit?