Wheat Market Faces Decline Amid Mixed Global Harvest Outlooks and Rising Russian Production Forecast

The wheat market experienced declines due to profit-taking and technical selling, despite some anticipated delays in the U.S. winter wheat harvest. Spring wheat in the northern U.S. Plains and Canada is expected to face wet, cool weather, limiting early growth. The market is also monitoring the Russian harvest and an expanding drought in the Black Sea region, which could affect spring wheat in both Russia and Ukraine. SovEcon increased its outlook for Russia’s total wheat crop to 84.1 million tons. Russia maintains the lowest wheat prices globally, giving it a competitive edge in exports.

The wheat market fell after SovEcon raised its forecast for Russian wheat production. Initial Black Sea harvest reports are better than expected, despite Russia's Central and Volga regions experiencing heat that might affect spring wheat production. Argentine wheat-growing areas face higher temperatures and lower rainfall, impacting estimates. Brazil's weather is mixed, with varying conditions across regions.

Japan's Ministry of Agriculture, Forestry, and Fisheries (MAFF) purchased 129,660 metric tons of food-quality wheat from the U.S., Canada, and Australia through a regular tender that closed on July 3. Japan, the sixth-largest wheat importer globally, tightly controls wheat imports, primarily through tenders issued three times a month.

India's wheat production reached a record high in the 2023-24 rabi season, up 2.9% from the previous year, despite a reduction in cultivation area. Yield increased, attributed to favorable weather, climate-resilient seed varieties, and government-assured prices. The Food Corporation of India (FCI) procured 26.6 million tonnes of wheat, benefiting 2.2 million farmers with payments at the Minimum Support Price (MSP).

Meanwhile, Kazakhstan plans to increase wheat exports to China to 2 million tons, with a focus on agricultural cooperation, including intellectual property and water resource management. In 2023, Kazakhstan's farm exports to China doubled, reaching 1 billion USD.

Morocco imported over 200,000 tonnes of wheat from Russia in the first half of the year. A delegation from Morocco’s National Food Safety Office visited Russia to observe grain quality control measures. Morocco's wheat imports are expected to reach 7.5 million tonnes for 2024-25.

On the other hand, Tunisia's state grains agency issued an international tender to purchase 50,000 metric tons of durum wheat, with offers due by July 4. Tight supplies from Canada due to drought have been offset by increased sales from Turkey.

Serbia expects to harvest 2.9 million tonnes of wheat in 2024, a 16% decrease from the previous year, due to a reduction in harvested area. However, the yield is anticipated to increase to 5.3 tonnes per hectare.

On the Chicago Board of Trade, September wheat fell 1.3% to $5.73 a bushel on Wednesday, as the anticipated damage to the Russian harvest due to adverse weather appears less severe.

European wheat prices also fell on Tuesday, correcting after a 2.5% rise in the previous session. Concerns about European and Black Sea crops had previously driven prices up. Russian wheat export prices have declined for four consecutive weeks, although the final harvest size remains uncertain.

European attention is on the French harvest, impacted by recent storms and expected rainfall. Agritel consultancy noted market nervousness about wheat production in the Black Sea basin and western Europe. Consequently, wheat prices might fluctuate within the current period and could potentially rise due to the unpredictable global climate conditions.

Data for Technical Analysis (1H) CFD US Wheat Futures - Sep 24 (ZWU4)

Resistance : 576.31, 577.37, 579.09

Support : 572.87, 571.81, 570.09           

1H Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 572.37 - 572.87 is touched, but the support at 572.87 cannot be broken, the TP may be set around 576.31 and the SL around 572.12, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 576.31 - 576.81, TP may be set around 583.00 and SL around 572.62, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 576.31 - 576.81 is touched, but the resistance 576.31 cannot be broken, the TP may be set around 571.80 and the SL around 601.81, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 572.37 - 572.87, TP may be set around 566.00 and SL around 576.56, or up to the risk appetite.       

Pivot Points Jul 4, 2024 03:05AM GMT