Commentary
A volatile trading session was seen today in wheat as Russia officially terminated the Black Sea Grain Deal. The initial announcement overnight sent Chicago wheat over 20 cents higher, while KC and Minneapolis posted similar gains. However, markets sold off this morning after coming to the realization there will most likely be plenty of world wheat supplies. Even with the shutdown, analysts say Ukraine can still export 1 million metric tons per month via land, and Russia and the EU both have large supplies that can suffice world demand until the coming harvest. Russian grain exporting union Rusgrain said on Monday its members planned to continue supplying customers with Russian grain at competitive prices, despite Moscow pulling out of the Black Sea grain export deal. “Russia is the largest supplier of wheat to the world market… All contractual obligations of Russian grain exporters will be fulfilled,” it said. The Kremlin also said they would return to the deal if conditions are met for Russian fertilizer exports, so in my view the door is still slightly open. The fact that both corn and wheat sold off on the news and ended the day in red should cause concern for the Bulls. Can prices trade higher? Absolutely they can in my view, but I believe the market is going to need to see declining Spring wheat conditions and a rally in beans and corn to hold support. Chicago wheat technical levels for the rest of the week come in as follows. Support is first at 6.32. A close under and 6.10 is next. Big level there in my opinion, as a close below could push the market down to 5.70 with a brief stop at 5.92. First resistance is at 6.66 and then 6.72. A close over is needed to challenge key resistances at 6.83 and 6.99.
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