Soft red winter wheat futures for December delivery at the Chicago Board of Trade on Tuesday hit a fresh contract low of $4.50 a bushel. Prices are in a steep 3.5-month-old downtrend on the daily bar chart. There are no early technical clues to suggest a market bottom is close at hand. Since the June 1 high of $7.25 1/4, December wheat has dropped around $2.75 a bushel, or around 40% in value.
The next major downside price objective for the still-powerful wheat market bears is major psychological support at $4.00 a bushel. For the wheat market bulls to gain some fresh upside near-term technical momentum to begin to suggest that a major market low is in place, they would have to push and close December wheat futures prices above strong flat-line and trend-line resistance at $4.85. Above that lies major psychological resistance at $5.00. The wheat market bulls do have “seasonality” factors on their side. Seasonality in agricultural markets is the tendency of market prices to trend in the same manner during a given time of the year, due to growing, weather and harvest patterns that change very little, overall, from year to year. Seasonality studies for wheat futures do show prices rallying from the present timeframe into the end of the year. Stay tuned! Jim Wyckoff