
- Recently, we've seen commercial pressure start to build in the Minneapolis (HRS) wheat market, indicated by the weakening inverse in the December-March futures spread.
- Despite this factor, noncommercial traders were busy building a net-long futures position, until late in the week.
- Given the bearish technical patterns that emerged on both weekly candlestick and bar charts, the stage is set for increased noncommercial selling over the coming weeks.
I mentioned in last Friday’s Afternoon Commentary (on my website: https://darinnewsom.com) that it was a bearish week for the December Minneapolis (HRS) wheat ((MWZ21) contract, regardless of the weekly chart one chose to look at.
On the contracts candlestick chart:

- Dec posted what is called a bearish engulfing pattern. According to Investopedia:
- The pattern consists of an up (green) candlestick followed by a large down (red) candlestick that eclipses or “engulfs” the smaller up candle.
- The pattern can be important because it shows sellers have overtaken the buyers and are pushing the price more aggressively down (down candle) than the buyers were able to push it up (up candle).
On the bar chart I usually post, December Minneapolis posted a clear bearish key reversal:

- The contract took out last week’s high of $10.58 on its way to a new contract high of $10.8650 before
- falling well below last week’s low of $10.09 as it hit a weekly low of $10.0550 and
- closed at $10.0950, down 42.75 cents for the week.
- The bearish key reversal is one of the more reliable reversal patterns I look for, and in this case confirms the secondary (intermediate-term) trend has turned down.
- The downside target area is between $8.86 and $8.24
- The 38.2% retracement and 50% retracement levels of the previous secondary uptrend from the contract low of $5.6150 through last week’s new contract high.
- Initial support is at the previous 4-week low of $9.35.
Lastly, keep in mind the most recent CFTC Commitments of Traders report (legacy, futures only) showed noncommercial traders increasing their net-long futures position to a record large 29,470 contracts (as of Tuesday, November 2). While initial selling was likely seen to close out the week, leading to these bearish technical patterns, it also indicates a lot more long liquidation could be seen over the coming weeks.
