Wheat - bet on harvest surprises?

24 ส.ค. 2022

Technicals: After large rally in the beginning of the year followed by similar drop over the past months, Wheat has been consolidating in 750-850 range. From the technical perspective, I am missing a convincing rejection of the lower lows before a rally can take place. However if the fundamentals were strong enough, they would subsidize for such price action.

Fundamentals & seasonality:
→ Wheat is known to drop in August and September in anticipation of harvest. This is exactly what has been happening, but the markets are likely to either calm down and wait for harvest numbers, or will turn back into rally if the numbers are back. For the moment, the future contracts are priced slightly higher than the present ones which means the market anticipated risk and price growth in the future.
→ A lot of high-yielding regions of Ukraine are either occupied or under siege. Also, the logistics is disrupted in the region.
→ Fertilizer prices are an issue.

Catalysts: It will all come down to harvest. Price can go nuclear or it can continue sideways.

I am personally looking to get a long position somewhere after a technical setup arises - either a strong rejection of the lows, or reasonably strong breakout of the consolidation range high.