October 16, 2009

Soft red winter wheat futures for December delivery at the Chicago Board of Trade on Wednesday (October 14) hit a nine-week high of US$5.29 a bushel. Price action Thursday did see a corrective pullback from the recent gains, which is not unexpected.

However, the wheat market bulls still have some near-term upside technical momentum on their side. Since the contract low of $4.39 1/4 was scored on Oct. 5, December wheat has rallied around 80 cents a bushel.

While Thursday's downside price action has not produced any chart damage, strong follow-through selling pressure from losses posted Thursday would likely produce a bearish weekly low close and would also hint that a near-term market top is in place.

For the wheat market bulls to gain fresh upside near-term technical momentum to suggest the fledgling uptrend in prices can continue, they will have to push and close December futures prices above solid overhead technical resistance at this week's high of US$5.29.