Key points
Chicago wheat futures dipped for the second consecutive day, consolidating below their recent 3-1/2-month peak.
Earlier in the week, prices surged on concerns over supply risks from Russia, the world’s leading wheat producer, facing drought conditions.
These conditions have prompted some Russian regions, such as Oryol, to declare states of emergency, adding weight to the global supply outlook.
Moscow’s ongoing dispute with Kazakhstan over grain imports and transit restrictions further compounds this uncertainty, putting a ceiling on how much wheat prices could fall in the near term.
The wheat futures contract (Wheat-C) closed at 5.797, experiencing a slight pullback after reaching an intraday high of 5.829. The market appears to be digesting recent gains, with some traders taking profit after the recent rally.
The MACD histogram has crossed into negative territory, indicating that bearish momentum is building. Additionally, the price has fallen below the 5-period moving average, suggesting further downside pressure may be ahead.
Traders will be closely monitoring the key support level at 5.788. A break below this level could lead to further selling pressure, while resistance remains at 5.961, a crucial point for any recovery attempts in the short term.
Picture: Wheat futures face downward pressure as prices pull back from recent highs, as seen on the VT Markets app.
Soybeans were flat at $10.45-3/4 per bushel, though they were down 1.9% over the week. The market’s softness comes as forecasts predict rain in Brazil, the world’s top soybean producer, improving crop conditions and easing supply concerns.
This forecast of favourable weather weighed on soybean prices, despite the broader backdrop of global uncertainties in other markets.
Global market participants are keeping a close eye on geopolitical developments, as tensions in the Middle East have pushed oil prices higher, influencing grain markets through their link to biofuel demand.
At the same time, stock markets remain under pressure, with weak performances seen across major regions, as traders assess the risks posed by both geopolitical instability and central bank rate decisions.
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While wheat and soybean contracts all recovered from four-year lows seen earlier this year, global supply chain disruptions, a weakened U.S. dollar, and shifts in monetary policy will likely keep these markets volatile.
With traders growing cautious, the next few weeks may see further consolidation, especially as we await more clarity on weather patterns in South America and ongoing political disputes in Eastern Europe.
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