Wheat Complex Faces Decline; Prices Hover at Crucial Levels

The wheat complex experienced a decline attributed to fund and technical selling, resulting in week-to-week decreases in the most active months at U.S. exchanges. The USDA raised production and export estimates for Russia and Ukraine, as well as exports for Australia and Canada. However, exports were down, and imports were up for the European Union.

Projected 2023/24 U.S. wheat ending stocks decreased by 11 million bushels due to reduced supplies, offsetting lower usage. The June 1 beginning stocks were lowered based on the NASS Grain Stocks report, and seed use was reduced by 1 million bushels to 64 million. The season-average farm price for 2023/24 is forecasted to be $7.20 per bushel, $0.10 lower than the previous estimate.

Globally, the outlook for 2023/24 indicates larger supplies, consumption, trade, and ending stocks compared to the previous month. Global supplies increased by 3.6 million tons to 1,056.5 million, primarily driven by higher beginning stocks and production. Changes in production occurred in various countries, with increases in Russia, Ukraine, and Saudi Arabia outweighing a decrease in China. Global consumption rose by 1.8 million tons, mainly due to higher feed and residual use for India and the EU.

World trade increased by 2.4 million tons, driven by higher exports from Ukraine, Russia, Australia, and Canada, offsetting a decrease in the EU. Projected 2023/24 ending stocks rose by 1.8 million tons to 260.0 million, primarily due to increases in the EU and Ukraine.

Russian wheat prices fell slightly amid weak global demand. Egypt continued to buy Russian wheat in large quantities, and Russia's grain exports decreased from the previous week.

In India, the Food Corporation plans to allocate wheat to battle inflation, with retail prices of wheat flour remaining firm. India anticipates a bumper wheat crop, eliminating the need for wheat imports. The government aims to control prices and combat food inflation by selling wheat until March.

Oman achieved an agricultural milestone with a substantial increase in wheat production, attributed to modern irrigation techniques and strategic alliances with companies like Oman Flour Mills.

Algeria issued an international tender to buy soft milling wheat from optional origins, providing an opportunity for Western European and Black Sea suppliers to compete. Algeria is a crucial market for wheat, and the tender results will indicate the competitiveness of Western European supplies following recent price falls.

The wheat market faced challenges with Euronext wheat setting new contract lows amid a slide in U.S. grain futures. Algeria's tender and competition between Western European and Black Sea suppliers contributed to market uncertainty.

The grain sector, encompassing corn, soybeans, wheat, oats, and rice futures, plays a crucial role in feeding and powering the world. While oat prices increased in 2023, other grains and oilseeds experienced double-digit percentage losses. As the world approaches the 2024 crop year, factors such as weather, the war in Europe's breadbasket, and traditional energy prices will influence grain and oilseed prices.

Last Friday, wheat prices experienced a notable decline, breaking the crucial support level at 605.00 and settling below it. With the price currently fluctuating between the support at 595.00 and resistance at 639.30, market participants are eagerly awaiting a decisive breach of either level to determine the next clear direction.

A breakthrough below the support could trigger negative targets, starting at 573.00, while surpassing the resistance may lead to new gains, potentially reaching 667.00 in the near term. The expected trading range for this period is between 595.00 (support) and 615.00 (resistance).

Data for Technical Analysis (15Min) CFD US Wheat Futures - Mar 24 (ZWH4)

Resistance : 597.14, 597.36, 597.7

Support : 596.46, 596.24, 595.9                      

15Min Outlook         

Source: Investing.com

Buy/Long 1 If the support at the price range 595.96 - 596.46 is touched, but the support at 596.46 cannot be broken, the TP may be set around 597.14 and the SL around 595.71, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 597.14 - 597.64, TP may be set around 598.10 and SL around 596.21, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 597.14 - 597.64 is touched, but the resistance 597.14 cannot be broken, the TP may be set around 596.20 and the SL around 597.89, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 595.96 - 596.46, TP may be set around 595.10 and SL around 597.39, or up to the risk appetite.       

Pivot Points Jan 16, 2024 08:14AM GMT