Drought, Ukraine Drive Wheat Higher
Today’s Spotlight Market
Violence in the Ukraine has ramped up over the weekend, leading to fears that exports from the country could be disrupted.? Clashes in Odessa have left several people injured.? Odessa and four other Black Sea ports handle the bulk of Ukrainian Wheat shipments, which makes the situation in the city of particular concern.? Russian and Ukraine are expected to be the fifth and sixth largest Wheat exporters for this upcoming crop year.
Fundamentals
The turbulent Ukrainian situation is not the only factor driving Wheat prices higher.? Dryer weather conditions across most of the western Great Plains region could cut production.? Parts of Kansas had temperatures over 100 degrees this past weekend.? Parts of Kansas and Oklahoma are expected to have temperatures reaching in excess of 90 degrees this week.? Kansas winter Wheat production is only expected to be a paltry 33.2 bushels an acre, which would be the lowest output in seven years.? Total Oklahoma winter Wheat production is only forecast to be 66.5 million bushels, which would be the lowest output since 1957.? The bullish fundamental news may, however, be offset by rising Canadian stockpiles.? Canada had a record harvest according to government estimates and inventory levels increased by 47 percent over last year.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the July Wheat contract breaking through near-term resistance near the 715 level.? Yesterday?s candlestick has a long upper shadow, suggesting prices could reverse.? Traders may want to be a bit cautious with the near-term breakout and wait for a confirmation of the breakout.? The next resistance level may be found near the 800 level.? The RSI indicator is showing technically overbought conditions, which could result in choppy trading.??
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