Trade view /
02 June 2016 at 22:51 GMT
On a broad base, grain futures prices are booking solid gains amid bad weather in the US, floods in Argentina and drought in Brazil. I looked at corn yesterday, but in response to a client request here is my thoughts on wheat.
The weather in the Americas has been well documented, but do not overlook the heavy rains that have been affecting continental Europe. The weekly rating score for French wheat rated “good” and “excellent” was cut by the “FranceAgriMer” agricultural agency to 83% on May 23 from 86% on previous week. It will only get worse as weather forecaster Meteo France predicts heavy rains in France will continue and so further hurt the outlook for wheat crops.
France ranks sixth in global wheat production and third for global exports. The broader European outlook is not looking good as heavy rainfall is starting to impact Eastern Europe as well. Europe accounts for about 40% of global wheat exports.
Source: www.investing.com Spotlight Ideas
The daily chart above shows that wheat prices have become stuck, and rotating in a sideways channel since last August. However,a now spot price is ahead of the 50 and 200 day moving averages and at a deeper technical level, the MACD and parabolic indicators at all time levels call for a BUY or STRONG BUY.
The outlook is encouraging, as prices can stay strong into early 2017, with prices heading to US Cents 524/Bushel expected by Q1 next year.
Source: Spotlight Ideas
Management and risk
Wheat July 16 ZWN6, in US Cents/Bushel
Entry: Buy 485.50 at 1914 BST (1814 GMT)
Targets: 493.83 … 508.73 … 518.50 … 528.27
Time horizon: Medium term
— Edited by Robert Ryan
Non-independent investment research disclaimer applies. Read more