- While the Chicago (SRW) futures market has posted a sharp rally of late, the move has been driven more by funds short covering rather than a change in fundamentals.
- Total open interest in the market has dropped by almost 72,000 contracts the last two weeks, a bearish technical indicator for a rallying market.
- National average basis remains weak as well, the key factor in reading a market according to Grains Golden Rule.
I can honestly say that on my Bingo card of topics to be discussed during 2023, the bullishness of soft red winter (SRW) wheat was nowhere to be found. Yet here we are in early December, following a week when we watched the March futures contract rally nearly a dollar from the previous week’s low of $5.5625 (November 27) through last week’s high of $6.4950 (December 6). Along the way we saw USDA announce SRW sales four of the past five mornings, all to China and totaling 1,120,000 mt (41.2 mb). Recall I’m the one who always talks about listening to what the market is telling us, in the case of SRW wheat, can we believe what the market is saying at this time?
