CNS Canada — U.S. wheat futures have moved steadily lower since the beginning of July, and appear poised for more losses as there is little supportive news in the market.
“There’s just nothing bullish in the wheat market at the moment,” said Adam Knosalla of Frontier Futures in Minneapolis. He added that “down is the path of least resistance at this point.”
The outlook was especially bearish for spring wheat, he said, as the U.S. spring wheat harvest is just over half-finished and the market is still not seeing heavy farmer selling.
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“I think farmers are waiting for a bounce to sell,” said Knosalla, adding that basis will need to do some work to encourage deliveries.
From a chart perspective, he said he was unsure how low wheat could go, as the futures have “already taken out every single target there is.”
Relatively favourable weather conditions for the latter half of the U.S. spring wheat harvest, a lack of significant export demand and ample wheat supplies elsewhere in the world were all said to be contributing to the sluggish prospects for wheat.
“The way we’re going right now, I’m not sure what could spark a rally,” said Knosalla.
Non-routine export business, or any surprises in the Statistics Canada production estimates due out Friday, could potentially provide support. However, any corrective bounces will likely be short-lived before wheat returns to grinding lower.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.
