The Barchart National HRW Wheat Price Index (HWPI, weighted national average cash price) moved back into a major (long-term) downtrend as it posted a new low of $6.4658 during August. It’s possible this turns out to be a classic head-fake given Kansas City futures spreads remain bullish. Theoretical Positions: Remaining cash bushels were likely sold during the August selloff. We will not wait for a clear bullish reversal signal before going long the market.
The Barchart National SRW Wheat Price Index (SWPI) also extended its major downtrend to a new low of $4.9051 during August. This was the lowest the SWPI had been since August 2020. Monthly stochastics show the market to be sharply overbought. However, with Chicago futures spreads covering more than 100% calculated full commercial carry and commercial storage rates set to increase on September 19, it will be difficult for the cash market to rally. Theoretical Positions: None at this time.
The Barchart National HRS Wheat Price Index (HSPI) extended its previous major downtrend to a new low of $6.6002 during August, erasing the bullish 4-month reversal from July. Theoretical Positions: Cash bushels should be sold as harvested despite monthly stochastics sitting well below the oversold level of 20%.
The Teucrium Wheat Fund (WEAT) looks to be moving toward a major uptrend. Monthly stochastics established a bullish crossover below the oversold level of 20% at the end of June. WEAT tested its previous low of $5.88 during August, but held. Theoretical Positions: None at this time. Those wanting to go long will wait for a clear reversal pattern, most likely a move to a new 4-month high beyond $7.43 (May 2023).