December HRS Reaches a Contract High and Closes Lower

DTN Contributing Analyst Joel Karlin has reported in this week’s Fundamentally Speaking blog that the USDA’s initial crop condition rating for spring wheat is the “second-lowest first crop rating ever next to the disastrous year of 1988 when the first rating was 632 and led to a final spring wheat yield an astounding 35% below trend in that horrific drought season.”

Despite this initial crop condition rating, released on May 30, noncommercial traders have reduced their bullish net-long position in spring wheat futures for a third straight week, as seen on the blue bars of the histogram seen on the second study. This position was reported at 16,144 contracts net-long as of June 1, the smallest bullish position seen in six weeks.

The lines on the second study show spreads weakening modestly this session, although the September/December futures spread (red line) remains at a bullish inverse of 3 1/4 cents, while the December/March spread (brown line) ended at a 4 1/2 cent inverse, signaling a continued bullish view of new-crop fundamentals that bears watching.

The purple bars on the third study represents daily volume, while the June 7 volume of 3,057 contracts (December contract only) was the largest daily volume seen during the life of the contract as the long liquidation continues.

The lower study shows the stochastic momentum indicators rolling over and crossing, signaling a change of direction on the short-term chart. At the same time, this cross-over is seen below the overbought line of 80, which indicates this is not the most bullish of turns, which are reserved for crossing lines within overbought territory.

Today’s late news shows the June 7 Crop Progress report of the U.S. crop condition revised lower to 38% good to excellent, down five percentage points from last week, with North Dakota’s condition rating increasing by one percentage point to 32% good to excellent, where approximately 50% of the spring crop is produced.

Cliff Jamieson can be reached at

Follow him on Twitter @Cliff Jamieson

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