??? Fundamentals
Many bullish and bearish Wheat traders seem to have reached a stalemate, with price activity turning choppy and range bound. Since the middle of July, lead-month December Wheat has traded in a narrow $1.00 price band, as Wheat price movement mostly followed that of Corn as some traders looked for increased demand for wheat, as animal feed due to high Corn prices. However, now that Wheat prices are over $1 per bushel higher than Corn, some analysts are looking for less Wheat to be used as feed. U.S.
Wheat exports have been disappointing as U.S. prices are currently uncompetitive, especially versus Russian Wheat, which has gained most of the recent export business. Many traders still believe that Russia will soon have to curb grain exports, as drought conditions have impacted this season’s crop production, but so far there are no signs of this occurring.
Going into the planting phase for the 2012-13 season, conditions are still too dry in the central and southern Plains for an ideal start to the new-crop. However, with new-crop, July 2013 futures currently trading well north of $8, some producers will most likely increase their Wheat planting acreage to take advantage of attractive new-crop prices.
?? Technical Notes
Looking at the daily chart for new-crop July Wheat, we notice prices trading between 850.00 and 950.00 for most of the past 2 months. Prices are at the lower-end of the recent price range and we may see some early hedge selling emerge should producers fear prices will fall below 800.00 in the coming weeks. The 14-day RSI is neutral with a current reading of 54.50. Support for July Wheat is seen at the August 14th lows of 838.25, with resistance found at the contract highs of 944.75
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