Global Wheat Markets Volatile as Weather Shifts, Russia Limits Exports

Global wheat markets remain volatile due to shifting weather conditions, government policies, and trade restrictions. The U.S. wheat complex saw gains from technical buying, while recent cold snaps may have caused winterkill in key growing areas. Russia’s export cap, effective February 15, is expected to reduce 2024/25 grain exports to 57 million tons, down from 72 million last year. The USDA projects slightly higher U.S. wheat supplies and ending stocks, with unchanged exports and a marginal price decline.

Japan has issued a tender to purchase 89,134 metric tons (MT) of wheat from the U.S. and Canada, providing additional support to prices. Furthermore, lower global wheat stocks, excluding China, suggest that demand for wheat could increase in the coming months.

Globally, wheat supply is projected to rise slightly due to increased production in Syria and Pakistan, but overall consumption and trade are expected to decline, largely due to reduced Russian and Ukrainian exports. Russia faces a steep decline in grain production, worsened by poor weather, seed shortages, and government restrictions. The European Union has imposed tariffs on Russian and Belarusian grain imports, further tightening Russia’s market access.

In the UK, wheat prices have weakened due to limited exports and a strong pound. Imports have surged to record levels, driven by lower domestic yields and quality concerns. Conversely, Argentina has benefitted from favorable weather, boosting its wheat production by 29% from 2009. The government’s temporary reduction in export taxes is expected to impact global grain trade.

Canada is investing in wheat breeding to enhance yield and disease resistance, while its agriculture ministry forecasts a mixed outlook for grain prices in 2025, with wheat expected to see modest gains. The EU’s wheat exports are lagging 37% behind last year, affected by missing trade data and stiff competition from Black Sea supplies.

Jordan continues to procure wheat through international tenders, with recent purchases from Bulgaria and expectations for further bidding. Meanwhile, increased demand for U.S. wheat exports is keeping futures elevated despite broader market uncertainty.

Chicago wheat futures have experienced fluctuations as traders react to concerns over potential U.S. trade tariffs, global supply conditions, and speculative market activity. Prices rebounded after recent declines caused by fears that President Donald Trump may impose a 25% tariff on imports from Canada and Mexico. The possibility of additional tariffs on China further adds to market uncertainty, with analysts warning that such measures could spark trade retaliation and disrupt agricultural exports.

Market participants are closely monitoring South American crop conditions, as dry forecasts in Argentina and excessive rainfall in parts of Brazil may delay planting, particularly for Brazil’s critical second corn crop. Speculative trading has also played a role in price movements. Funds appear to be reducing their short positions in wheat while maintaining strong long positions in corn and soybeans.

Overall, the grain markets continue to be influenced by technical trading patterns, speculative fund activity, and broader economic factors, including currency fluctuations and inflation trends. Traders remain cautious, as any new developments in trade policy, weather conditions, or supply chain disruptions could further impact price direction in the near term.

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

Resistance : 562.73, 563.31, 564.27

Support : 560.81, 560.23, 559.27   

1H Outlook  

Source: TradingView

Buy/Long 1 If the support at the price range 557.81 - 560.81 is touched, but the support at 560.81 cannot be broken, the TP may be set around 563.44 and the SL around 556.31, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 562.73 - 565.73, TP may be set around 566.00 and SL around 559.31, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 562.73 - 565.73 is touched, but the resistance 562.73 cannot be broken, the TP may be set around 560.81 and the SL around 567.23, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 557.81 - 560.81, TP may be set around 557.00 and SL around 564.23, or up to the risk appetite.       

Pivot Points Jan 30, 2025 02:19AM GMT