Weekly Market Analysis: Wheat Price is Consolidating
The price charts for the Kansas City wheat contracts show a consolidating pattern after making a new recent high on July 20. World wheat production is the center of attention for analysts and traders. The Black Sea Region is at the top of their list of countries.
The average estimate for wheat production in Russia by analysts is 45 million metric tons. This week, their Agriculture Minister updated his supply number and listed 50 million metric tons. He estimated wheat exports at 11 to 15 million metric tons. Many analysts see their wheat exports below 10 million metric tons. This announcement was a bearish surprise to the wheat market. Bullish traders had to re-examine their beliefs. Some liquidated long positions. Most of the liquidation came from funds that were holding a record net long position in the Chicago wheat market. Choppy trading describes this week’s price action.
Demand for high quality wheat in the United States remains strong despite the price level. This week’s export sales report listed 520,000 metric tons. There were 28 countries purchasing wheat with six countries buying over 50,000 metric tons. This steady wheat business shows the current need for wheat. Usually the last action in a price rally in wheat is when wheat-importing countries buy wheat out of fear that the world is running out of wheat. We are far from this situation.
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