In speaking with clients and other brokers leading up to and in the aftermath of yesterday’s WASDE report, there has been a good amount of discussion regarding the price action in the wheat market, especially given the positive trading. In yesterday’s trading, the July and September contracts both finished up over 23 cents per bushel.
While dryness and weather have been great factors, today’s report and trading as well as current and historical levels are making the wheat market interesting to follow and trade.
As pictured in the chart below, the wheat contract has hardly traded above these levels over the past year. Add in the already dry conditions from the past several months and the summer heat in the Northern hemisphere and United States yet to come, along with price action that has continued to make higher lows as of late (and their unbroken trendline), and one may conclude that something has to give soon.
For example, traders who are unsure of whether these levels will continue to act as highs visiting resistance prior to heading lower or if new highs will be made with the old highs and resistance acting as support, may want to consider an options spread. To discuss which trades are best for your account and objectives, please contact me at your convenience.
Wheat Daily Continuation Chart