Wheat Market Volatility

The wheat market experienced a decline due to a combination of fund and technical selling. Russia's dominant position in the global wheat market has led to less-than-desirable demand for US wheat, with current sales running 14% below the levels seen a year ago. While winter wheat planting conditions in the US are normal, concerns persist in Argentina, Australia, and Brazil, although these have taken a back seat. The Southern Hemisphere, responsible for only about 20% of global wheat exports, faces challenges. The Russian wheat market remains bearish, and Ukrainian trading activities persist.

The US Department of Agriculture (USDA) projected wheat ending stocks for the marketing year 2023/2024 at 615 million bushels, exceeding trade expectations of 595 million bushels.

Wheat prices hit overnight lows with futures showing losses. Egypt reportedly purchased 480,000 MT of Russian wheat at below-market prices. USDA also indicated a decrease in wheat shipments for the week ending October 5.

Chicago wheat futures dipped on October 9 as export prices in major supplier Russia decreased further, driven by expectations of a slowdown in Russian grain exports for the rest of the year. Abundant and inexpensive grain from Russia, fueled by a successful harvest last year and robust exports this year, is keeping prices low. The most-active Chicago Board of Trade (CBOT) wheat futures were down 1.1%, near the three-year low recorded last month.

The Sovecon agriculture consultancy estimates Russian wheat exports in October to be between 3.9-4.4 million tonnes, down from 5 million in September. The European Union's crop monitoring service has reported a 25% decline in Kazakhstan's wheat harvest this year, attributed to severe weather conditions. Meanwhile, the drought in Argentina is impacting wheat prices.

Ukrainian vessels continued loading and shipping wheat under a new humanitarian corridor. However, concerns over sea mines in the Black Sea persist. Ukrainian exports through the Danube route are ongoing, but the congested Sulina Channel is causing delays and affecting transport costs, while wheat prices could experience some fluctuations, moving both slightly higher and lower during this timeframe.

Data for Technical Analysis (1H) CFD US Wheat Futures - Dec 23 (ZWZ3)

Resistance : 556.11, 556.35, 556.73

Support : 555.35, 555.11, 554.73                        

1H Outlook  

Source: Investing.com              

Buy/Long 1 If the support at the price range 554.05 - 555.35 is touched, but the support at 555.35 cannot be broken, the TP may be set around 556.11 and the SL around 553.40, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 556.11 - 557.41, TP may be set around 559.00 and SL around 554.70, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 556.11 - 557.41 is touched, but the resistance 556.11 cannot be broken, the TP may be set around 555.06 and the SL around 558.06, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 554.05 - 555.35, TP may be set around 552.50 and SL around 556.76, or up to the risk appetite.       

Pivot Points Oct 12, 2023 02:40AM GMT