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Morning Futures Roundup
Wheat Woes Already Priced In?
Wheat prices gained on the heels of Corn, as the USDA reported a widening deficit in this year's Corn crop. While Wheat moved higher in sympathy with Corn, the report likely would not be seen as bullish for the grain. The production deficit for the current crop year was forecast to drop to 19.4 million tons from 20 million tons in last month's report. Wheat may actually be vulnerable to selling pressure, as many traders have already priced-in the large shortfall and the impact of the heavy rains in Australia. However, the downside potential for prices may be limited due to concern among traders that 2011 may face the same type of food shortages seen in 2008.
Turning to the chart, we see the March Wheat contract holding above support at 750. A close below this level could be seen as a downside breakout and a confirmation of a double-top pattern on the daily chart. If the double-top is confirmed, prices could possibly trade down into the low 700's. Recent closes below the 20-day moving average indicate that a relative high may be in place. The 50-day moving average comes in just below support at 750, and a close below the average could further validate a downside breakout if it were to happen.
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