Global wheat markets end 2024 with mixed trends amid trade and weather shifts

The global wheat market remains influenced by geopolitical tensions, weather conditions, and shifting trade dynamics as 2024 concludes. Wheat futures experienced mixed trends, with Chicago prices falling while European and UK futures rose slightly. Limited activity was noted among well-supplied buyers, with global markets navigating harvest updates and regional developments.

The U.S. wheat outlook for 2024/25 projects slightly larger supplies, increased exports, and lower ending stocks. Exports are expected to rise by 25 million bushels, driven by strong demand in East Asia. Despite this, ending stocks are reduced by 20 million bushels, reflecting increased export activity. Globally, wheat supplies are forecast to decline by 0.6 million tons due to lower production in the EU and Brazil, though ending stocks are slightly higher, reaching the lowest levels since 2015/16.

Russia's wheat exports face challenges with reduced quotas expected in February 2025, limiting supply despite strong early performance. Argentina and Australia are compensating with larger crops, while Ukraine's exports rose significantly, up 37% year-on-year, amid ongoing war disruptions. Notably, Saudi Arabia emerged as a key buyer of Russian wheat in December, surpassing Egypt. Conversely, Turkey's imports dropped significantly year-on-year.

In Kazakhstan, wheat exports to Uzbekistan surged to a record 732,000 tonnes in September-October 2024, marking the highest volume in recent seasons. Uzbekistan remains Kazakhstan's top wheat importer.

Meanwhile, the U.K.'s 2024 wheat harvest dropped 20% year-on-year to 11.1 million tonnes, the second-worst since 1984, driven by adverse weather, with overall grain yields declined, raising food security concerns as highlighted in the U.K. government's recent report.

Global wheat markets saw mixed activity. While Saudi Arabia's purchase of 804,000 MT provided some support, exports from the EU and Russia are projected to decline in 2024/25. The strengthening sterling against the euro has pressured U.K. wheat prices, boosting imports but making U.K. exports less competitive. Over 77% of the U.K.'s imported wheat between July and October 2024 came from the EU, with import volumes rising 80% compared to the five-year average.

The FAO reports declining global wheat prices due to Southern Hemisphere harvests and improved conditions in the Northern Hemisphere. Meanwhile, Ukraine's wheat market saw price increases driven by limited supply and agrarians holding back sales. However, trade demand softened, capping further price hikes.

Wheat futures on the Chicago Board of Trade are under pressure due to favorable South American crop conditions, weakening demand from China, and global competition. Brazil is forecasted to achieve record soybean production of 171.5 million metric tons, driving soybean futures to life-of-contract lows at $9.74 per bushel. Similarly, U.S. wheat exports face stiff competition from Argentina and Australia, despite some support from Russian price increases. A strong U.S. dollar compounds these challenges, making American grain exports less competitive globally. As markets anticipate U.S. Federal Reserve and Bank of England interest rate decisions, changes could impact the dollar, further influencing global grain and commodity prices.

Data for Technical Analysis (1D) CFD US Wheat Futures - Mar 25 (ZWH5)

Resistance : 549.22, 550.62, 552.87

Support : 544.72, 543.32, 541.07   

1D Outlook      

Source: TradingView

Buy/Long 1 If the support at the price range 539.72 - 544.72 is touched, but the support at 544.72 cannot be broken, the TP may be set around 548.94 and the SL around 537.22, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 549.22 - 554.22, TP may be set around 558.00 and SL around 542.22, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 549.22 - 554.22 is touched, but the resistance 549.22 cannot be broken, the TP may be set around 543.04 and the SL around 556.72, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 539.72 - 544.72, TP may be set around 533.60 and SL around 551.72, or up to the risk appetite.       

Pivot Points Dec 18, 2024 03:29AM GMT