September 16, 2009
Bears still in command of CBOT wheat
Soft red winter wheat futures for December delivery at the Chicago Board of Trade are in a steep 3 1/2-month-old downtrend with no signs of an end in sight.
December wheat hit a fresh contract low of US$4.50 a bushel on Tuesday (September 15).
Since the June 1 high of US$7.25 1/4, December wheat has dropped around US$2.75 a bushel, or around 40 percent in value. The next major downside price objective for the still powerful wheat market bears is major psychological support at US$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 US$4.85. Above that lies major psychological resistance at US$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 show prices rallying from the present time frame into the end of the year.
