Price action: March SRW wheat rose 10 cents to $7.78 3/4 and near the session high. March HRW wheat rose 9 1/2 cents to $8.01 1/4, also near the session high. Spring wheat futures rose 19 1/4 cents to $9.40 1/2.
Fundamental analysis: Wheat futures rose after Stats Canada reported a big drop in the country’s inventories at the end of 2021, fueling concern over tight supplies of milling-quality wheat. Canada’s wheat stocks at the end of December totaled 15.6 MMT, down 38% from the same period in 2020 and nearly 2 MMT smaller than market expectations. The drop in stockpiles is mainly due to poor growing conditions in western Canada.
Wheat futures also gained on short covering from recent declines, as well as position-evening heading into Wednesday’s monthly USDA Supply and Demand report. USDA is expected to reduce its 2021-22 global ending wheat stocks forecast by around 60,000 MT, to 279.89 MMT. Signs of possible easing in Russia/Ukraine tensions may limit the upside in wheat futures in the in near term. However, that situation is still very fluid and could change in a hurry.
Technical analysis: SRW futures today and scored a bullish “outside day” higher on the daily bar chart. SRW winter wheat bulls and bears are on a level overall near-term technical playing field. SRW bulls’ next upside objective is closing March futures above solid resistance at $8.00. Bears’ next downside objective is closing prices below solid support at the January low of $7.35 1/2. First resistance is seen at today’s high of $7.82, then at $7.90. First support is seen at $7.60, then at today’s low of $7.54.
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