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360-289-9441(March 26, 2000) WHEAT: May wheat is just tearing the heart of small speculators and quite a few farmers. Its trend is down from 2/25, having been unable to sustain its most recent rally. It has done this before; we call it a false breakout and wheat has been false to us. Less than 10 cents from its contract low, some traders believe that this is the last "blow out" before higher prices. The corn/wheat spread has been brushed off and taken a closer look at, with the view that it will reverse over the longer term through the summer. Stochastics are bearish in all time frames; 9- and 18-day moving averages are bullish, though, a lagging indicator; momentum and direction point down. May would have to rise another 20 cents to interest a trend change call. With little reward to the downside, it is a game of waiting for a strong signal to wake us up. Looking backwards to early December we are disheartened at the dragon's tail of higher and lower prices in quick succession; price-wise, it seems as if the market has hardly moved. Down.
Fundamentals: Some of the moisture was removed from forecasts for next week, but this didn't effect futures prices. Growing conditions for hard red winter wheat continues to be excellent. Whatever funds were long appear to be liquidating...by about 5,000 contracts Friday. Kansas City wheat is near the contract lows.
Martin B. Miller
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