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Chicago Wheat Futures Gain in Mixed Trading

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Strategy of the Day 2.5.2020

Chicago Wheat Futures Gain in Mixed Trading

March 2020 wheat futures closed trading up 4 cents today, continuing to put pressure on 564.25 highs of February. Trade was generally mixed throughout the day, with price action entirely contained within yesterdays range, creating an inside day for the wheat market. This short-term consolidation could result in a bullish breakout higher, if the wheat market can overtake the highs of yesterday and today. Since the start of 2020, the March contract for Chicago wheat has been retracing the early breakout above the 550-560 highs of October and November, and since last Friday has been holding this area as a supportive inflection zone which has the ability to take the market back to 2020 highs at 592.5. What was once the resistance into the end of 2019, is now support for price to begin 2020.

From a fundamental perspective, the US wheat market is continuing to look undersupplied; with US ending stocks for the 2019/20 year of 965 million bushels; a moving target with winter wheat plantings are also down 4% from last year. If the currently very strong USD begins to weaken as well, it has the potential to spur exports and begin a period of price rationing into the second quarter. Its my opinion that wheat has been (and will continue to be) a leader for the entire grain complex. All of this is being overshadowed however, by good weather forecast for most of the worlds current growing regions, which would likely be seen a negative for price.

The technical picture is a little clearer however, with prior breakout levels being tested and holding as support (I mentioned the 550-560 highs from Oct/Nov above). There are several other technical reasons to think wheat may be continuing its trend higher as well. The first, is the supportive trendline drawn against the lows of the channel price has traded higher within. There is also the equal legs measured 100% Fibonacci extension which supported the 50% Fibonacci level at 547.50; a confluence of Fibonacci measurements that aligned with the breakout pivot. Lastly, there are two broken trendline resistances, now being tested as support. The first of which is best seen on a daily chart and is the thickest dashed yellow line on the chart below. The second, is the narrow downward sloping trendline against the highs in the decline since 592.5. This shorter term trendline break is more indicative in my opinion of a near term move higher for wheat and is a reason I believe todays price action was a market breaking this resistance and testing that broken resistance as support. If the bulls maintain control, and continue their trend higher, it will be important for them to see them retake the 575-580 resistance zone and put pressure on bears who may be selling this rally in the belief the market is going lower.

Dan can be reached at (312)277-0110,, or on twitter @DanielHusseyJr with any question or further comments. You can click belowto get access to the Zaner Ag Hedge daily newsletter to receive his emailed commentary daily!

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March 2020 Chicago Wheat Futures 240m Chart

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About the author

Dan began his career in 2006 as an arbitrage and clearing clerk for Spyglass Options in the Eurodollar futures options pit on the floor of the Chicago Mercantile Exchange. Taking his employing brokers advice, Dan soon left the floor to pursue a career “behind the screens upstairs”, as there was an inherent lack of opportunity for market making in open outcry pits. After graduating from the University of Notre Dame in 2009 (and for the subsequent 10 years), Dan leveraged his IT background in networking and computer programing to begin developing computerized trading algorithms and trading systems for multiple private equity firms and his own account. He eventually found his specialization in trading carry trade dynamics in currency and interest rate futures; while simultaneously building his experience in trading both inter-market and intra-market spreads. His trading experience later expanded to include most commodity spreads, with an emphasis on carry trade economics in agricultural commodities. In 2016 Dan decided to take his career full circle by becoming a series 3 and 34 licensed broker; and expanded his outreach to the agriculture production community. In 2018, he joined Zaner Financial Services Ag Hedge division, bringing his knowledge and expertise of carry trade economics and continues expanding exposure to spread markets. Dan can be reached at (312)277-0110 by phone, @DanielHusseyJr on twitter, @DanSOTD on facebook, and emailed at
Contributing author since 2/15/2019 

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