Chicago wheat futures were up eight days in a row coming into Friday morning. On Tuesday November 28th March Chicago wheat futures came off a low of $5.57/bu to get to as high as $6.49/bu earlier this week.
China has been in the market recently making significant purchases with 4 out of 5 days this week seeing flash sale announcements totaling 1.12 million metric tons.
Wheat bulls took a break on Friday deciding to take some profits while wheat bears caught a sigh of relief as the market was lower on the day.
Last Week’s Commitment of Traders (COT) report showed Managed Money to be holding a net short position in wheat futures totaling 120,000 contracts.
A significant sum that many had speculated could leave room for a short covering move if any fundamental story could get some legs under the market. That appears to be the case although the recent eight day rally was somewhat orderly without a clear “panic” day of short covering that leaves the door open for more upside in a bigger short covering move, or maybe, and perhaps more likely, the funds will not be pushed out of a short wheat position that has proven very profitable and remains a logical trade assuming Chinese purchases dry up in the short run.
Precious Metals Peak
Front month Gold Futures hit an all-time high of $2,130/oz on Monday and then the order came from somewhere to sweep the leg and there was no amount of Miyagi magic that could stop the slide.
A massive amount of volume traded that same day as gold and silver futures peaked only to finish much lower on the day putting in a key daily reversal lower and finishing lower yet on the week with a weekly key reversal lower in place as of early Friday afternoon.
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