Global Wheat Market Faces Volatility Amid Weather Impacts and Shifting Export Projections

The wheat market fell due to profit-taking and technical selling. For 2024/25, U.S. wheat is expected to have larger supplies, stable domestic use, increased exports, and lower stocks. The U.S. winter wheat production estimate increased by 1% from May and 4% from 2023, thanks to better yields and reduced abandonment. This offset an 8-million-bushel drop in ending stocks, driven by expectations of higher export demand due to crop losses in Russia and Ukraine.

The USDA adjusted export projections, raising them for Argentina, Canada, the EU, and Russia, while lowering them for Australia and Ukraine. The season-average farm price is raised by $0.50 per bushel to $6.50 due to higher expected prices and tightening global supplies.

Globally, 2024/25 wheat supplies, consumption, trade, and ending stocks are all projected to decrease. Supplies are expected to drop due to significant production declines in Russia, Ukraine, and the EU, partially offset by larger global beginning stocks. Russia's and Ukraine's production is lowered due to adverse weather, which led Moscow to declare federal emergencies. Global consumption is lowered, mainly due to decreased feed use. World trade is projected to decline with lower exports from Russia and Ukraine partially offset by increases from the EU and the U.S. Global ending stocks are lowered, primarily due to reduced EU stocks.

Russia, the world's leading wheat exporter, expects slightly smaller production and export totals for 2024-25, leading to a recent surge in wheat prices. Russia's wheat crop may be the smallest since 2021 due to frosts, drought, and excessive moisture. The winter wheat in the dry southern regions and delayed spring wheat planting in Siberia are affected by unfavorable weather. After Russia's wheat production surged in recent years, allowing the country to dominate the export market, it accessed regions like Mexico, Indonesia, and Vietnam and contributed to lower global wheat prices.

On the demand side, speculation exists that India may drop its wheat import tax to address rising demand and inadequate government stocks. If implemented, private importers could bring in 2-5 million tons, likely from Russia, which would affect the global market.

Turkey, a major wheat importer, recently announced an import ban, causing significant market fluctuations. This move primarily impacts Russia, Turkey's top wheat supplier. However, after Turkey's announcement, Chicago wheat futures dropped 7.5%, their largest weekly loss since July 2023.

U.S. wheat futures also fell on Wednesday as concerns about global export demand and rising U.S. inventories overshadowed the support from a shrinking Russian wheat crop. Analysts noted that while the Russian crop forecast was lowered, increased carry-in stocks globally kept wheat prices under pressure, emphasizing the need for increased demand to prevent further declines.

UK wheat prices might rise due to heavy rains in France, Europe's largest wheat producer, leading to its worst harvest in a decade. The UK's Energy & Climate Intelligence Unit (ECIU) warned that reduced French exports could impact UK prices, especially since the UK's own wheat production is also down due to earlier heavy rains.

Wheat prices recently breached $629.20. However, negative signals from the Stochastic indicator and continuous pressure from the EMA50 suggest the bearish trend may resume, targeting $605.80. Breaching $652.60 could lead to a bullish trend. The expected trading range for this period is between $625.00 support and $650.00 resistance.

Data for Technical Analysis (1D) CFD US Wheat Futures - Jul 24 (ZWN4)

Resistance : 623.98, 627.90, 634.25

Support : 611.28, 607.36, 601.01           

1D Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 591.28 - 611.28 is touched, but the support at 611.28 cannot be broken, the TP may be set around 624.38 and the SL around 581.28, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 623.98 - 643.98, TP may be set around 660.00 and SL around 601.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 623.98 - 643.98 is touched, but the resistance 623.98 cannot be broken, the TP may be set around 607.76 and the SL around 653.98, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 591.28 - 611.28, TP may be set around 575.00 and SL around 634.00, or up to the risk appetite.       

Pivot Points Jun 13, 2024 03:19AM GMT

Sources: Economies.com, Western Producer