Wheat Markets Face Planting Delays and Global Supply Challenges

Wheat markets have experienced a modest increase due to fund and technical purchases after fluctuating throughout most of the session. Rain has delayed winter wheat planting in the U.S., but it's beneficial for the crop's dormancy phase. The spring wheat harvest is nearing completion, and traders are closely watching international developments, including drought in the Black Sea region, the war in Ukraine, and challenges in Argentina and Australia. While U.S. wheat export demand has improved, pricing above demand is a concern. A grain workers' strike in Canada may shift some business to the U.S., while China's government has set a wheat purchase target for 2025 and 2026.

On the global front, factors such as dry weather in Russia, Ukraine's wheat planting delays, and lower production estimates in Argentina are affecting the market. Meanwhile, Australia's wheat production outlook is positive due to favorable conditions. However, competitive pricing from Black Sea exports, particularly Russia, is pressuring Western European wheat markets.

The U.S. wheat outlook for 2024/25 remains unchanged from last month, with the season-average farm price projected at $5.70 per bushel. Globally, wheat supplies are expected to increase by 1.5 million tons, reaching 1,062.1 million tons, thanks to higher beginning stocks, particularly in Canada. However, world wheat production is forecast to drop by 1.4 million tons to 796.9 million, with declines in the EU, due to poor weather in France and Germany, being partially offset by increases in Australia and Ukraine.

Global wheat consumption is predicted to rise by 0.9 million tons to 804.9 million, driven by increased feed use. World trade is also expected to grow by 1.7 million tons, with higher exports from Australia, Canada, and Ukraine, despite a reduction in the EU's export capacity. As a result, global ending stocks for 2024/25 are projected to rise by 0.6 million tons to 257.2 million.

Euronext wheat futures edged up on Wednesday, driven by concerns over dry weather affecting sowing in Russia and Ukraine. In Russia, wheat sowing rates have reached an 11-year low due to drought, and Ukraine’s winter wheat sowing has also decreased.

Russian wheat prices remain lower than Western European wheat, making it difficult for EU exporters to compete. Despite challenges, U.S. wheat export performance has been robust, with recent shipments to Mexico, South Korea, and the Philippines. However, the U.S. may struggle to maintain export growth if Russian supplies remain strong.

U.S. wheat exports are anticipated to reach a four-year high, supported by strong crop output and relatively stable prices. While U.S. wheat exports are performing well, long-term prospects remain uncertain due to factors such as Russian export growth and global competition.

U.S. wheat futures saw a slight increase on Wednesday following a weak Tuesday close. China set a wheat purchase cap of 37 million metric tons (MMT) for 2025 and 2026 as part of its price support program. Japan is tendering for wheat from Australia, Canada, and the U.S., and EU soft wheat exports have declined year-on-year. The USDA's upcoming quarterly grain stocks report, known for influencing market prices, is expected on next Monday.

Data for Technical Analysis (1H) CFD US Wheat Futures - Dec 24 (ZWZ4)

Resistance : 593.04, 593.70, 594.77

Support : 590.90, 590.24, 589.17

1H Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 589.90 - 590.90 is touched, but the support at 590.90 cannot be broken, the TP may be set around 593.84 and the SL around 588.90, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 593.04 - 595.04, TP may be set around 596.00 and SL around 589.90, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 593.04 - 595.04 is touched, but the resistance 593.04 cannot be broken, the TP may be set around 590.90 and the SL around 596.04, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 589.90 - 590.90, TP may be set around 587.60 and SL around 594.04, or up to the risk appetite.       

Pivot Points Sep 26, 2024 02:55AM GMT

Sources: ZAWYA, Canadian Cattlemen