Is $5 Sustainable?

Today’s Spotlight Market
Wheat futures continue to move lower amid fund selling after the bearish USDA report last week. The December contract has been flirting with the $5 level over the past few sessions, but has not broken through to this point. After declining 21% for the year, traders are wondering if we are close to reaching a bottom. Some view $5 prices as unsustainable, as this price level could attract value buyers.



The USDA estimates that the world output will reach a record 719.95 million metric tons this year, which would be a second consecutive yearly record output. For carry out, the USDA forecast domestic stockpiles at the end of the 2014-15 growing season next May 31 at 698 million bushels, up from its estimate of 663 million bushels last month.? Globally, stockpiles are expected to total 196.38 metric tons, up for last month?s forecast of 192.96 million metric tons. Saskatchewan has been experiencing some unseasonably cold weather.? The freezes may result in some quality issues for the crop in that region and can be seen as supportive.? The northern Great Plains is in danger of experiencing some early freezes, which traders may wish to monitor. ?


Technical Notes View Today’s Chart

Turning to the chart, we see the December Wheat contract continue to grind lower after breaking near-term support near the 520 level.? The Wheat contract is heading into an area of heavy chart congestion going down to the 435 mark.? The 435 support level could be seen as critical support.? Recent price action has resulted in the RSI falling into oversold territory.




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