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This is a follow up article to: Wheat prices surge as the Russian attack on Ukraine raises supply concerns
Wheat prices (Symbol: Wheat-C) have shown a modest recovery but remain close to their lowest levels since 2020, rising to $5.36-3/4 a bushel. However, this slight uptick comes after a week in which wheat prices have declined by nearly 3%, reflecting a broader bearish trend fueled by ample global supply.
Picture: Wheat price stabilises but remains under pressure, as observed on the VT Markets app.
We see the weekly chart for wheat showing a persistent downtrend, with the price currently hovering around $5.056. This decline is largely driven by the abundant supply of cheap grain from the Black Sea region, particularly from Russia and Ukraine.
Russia, one of the world’s leading wheat exporters, is expecting a bumper harvest this season, which will further contribute to the global supply glut. Meanwhile, Ukrainian grain exports have continued at a steady pace despite ongoing geopolitical tensions, adding to the oversupply in the market.
The chart indicates that wheat prices have been consistently trading below key Exponential Moving Averages (EMAs), particularly the 72-period EMA, which is acting as a strong resistance level.
The MACD indicator also supports the bearish outlook, with the MACD line below the signal line and the histogram showing sustained negative momentum. This suggests that the downward pressure on wheat prices is likely to continue in the near term.
Given the current fundamentals, wheat prices may remain under pressure unless there is a significant shift in the supply-demand balance, such as a reduction in exports from the Black Sea region or adverse weather conditions impacting the harvest.
Traders should monitor the support level near $5.000, as a break below this level could signal further declines.
The plentiful supply situation is not limited to wheat. Corn and soybeans have also been under pressure, with both commodities experiencing near four-year lows on Thursday.
The Pro Farmer crop tour has reinforced expectations of bumper U.S. crops, with particularly strong yield prospects in Illinois. This has led speculators to increase their bets on further price declines across these grains.
The abundant supply of wheat, combined with favourable weather conditions in key producing regions like Russia and the U.S., suggests that the downward pressure on prices may persist.
Related content: How to trade soft commodities
Given the current market dynamics, traders may consider strategies that capitalise on short-term price fluctuations, particularly in response to supply chain disruptions.
Monitoring speculative positioning and market sentiment will be vital for making informed trading decisions in this environment.
