Price Movements
Wheat futures on the Chicago Mercantile Exchange (CME) closed lower today, weighed down by continued high exports from Russia and a strong Euro, making European wheat less competitive. The December contract fell by 5.75 ct/bu, closing at 575.75 ct/bu (equivalent to 0.191 EUR/kg).
Fundamentals
Russia, one of the world’s largest wheat exporters, continues to dominate the global market with aggressive pricing, putting downward pressure on prices, especially for producers in Europe and the United States. Additionally, the strength of the Euro has made European wheat more expensive, hindering export competitiveness.
Key Factors
- Russian Exports: High export volumes from Russia are putting pressure on global markets. Despite political tensions and sanctions, Russia continues to expand its export reach into key markets.
- Strong Euro: The strong Euro is making European wheat less competitive on global markets, which is limiting exports and adding price pressure.
- Weather Conditions in Argentina: In South America, weather risks are adding uncertainty. Argentine wheat fields have been hit by drought, which could reduce yields. Meanwhile, irregular rainfall in Brazil is causing challenges for wheat planting.
Technical Analysis
The December wheat contract has tested support at 570 ct/bu (0.189 EUR/kg). A further decline below this level could push the price towards 560 ct/bu. On the upside, resistance remains at 580 ct/bu (0.193 EUR/kg).
Outlook
Prices are expected to remain under pressure as long as Russian exports stay elevated and the Euro remains strong. However, weather risks in South America, particularly in Argentina and Brazil, could impact the global wheat market if yields continue to be affected. Traders should keep an eye on the upcoming U.S. export figures and currency market developments, as these factors will play a key role in future price movements.
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