Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?



A Reversal in Wheat Futures?

By  +Follow June 24, 2014 12:47PM

The wheat futures markets have fallen by more than 20% since the first week of May. This isn’t too surprising. Several factors teamed up to take the air out of this market. Spring weather has been perfect, Ukraine issues aren’t affecting the markets and commercial producers had been sincere sellers in this rally from February through April indicating the general lack of fundamental risk in this market.

Commercial short hedges increased considerably as the market climbed above the $6.25-$6.40 area from late February through March. You can also see on this chart that commercial traders had been good buyers late last year in the $6.30-$6.50 area. Finally, on the recent decline it’s clear that they’ve resumed their purchasing in earnest below $6.50. Commercial traders are value players with both producer and end line consumer commercial traders seeking the best prices for their respective business needs. The wheat market’s recent swings have clearly identified their value area between $6.25 and $6.50 per bushel.

We’re currently looking for any kind of reversal higher in the futures market to show us that the commercial buying pressure is putting a bottom in this market. There’s good reason to believe the overnight low of $5.74 ¼ could hold. If wheat can extend its bounce, we’ll get long and place a protective stop underneath last night’s low. Finally, we’ll place this trade in the July contract even though first notice day is Monday, June 30th. The July contract expiration should provide some short covering buying to support our position into the notice period.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Liked What You Read? Join Equities.com as a contributor and get eyeballs on your content FOR FREE!

By  +Follow June 24, 2014 12:47PM



blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.

Login or Register