Wheat is currently experiencing selling pressure, unique among the agricultural commodities, following the holiday period. Despite continuing its weakening trend, the market is showing signs of stabilizing around the support level of 556. With fundamental information leaning towards a bearish outlook, wheat prices may continue to decline today.

According to consulting firm IKAR, Russian wheat export prices decreased last week, boosting export activity. IKAR reported that the FOB price for 12.5% protein wheat at Russian Black Sea ports fell to 219 USD/ton, down 5 USD/ton from the previous week. Meanwhile, SovEcon noted that Russian wheat export prices ranged between 218-224 USD/ton, lower than the 224-330 USD/ton range observed the previous week. SovEcon attributed the increase in Russian wheat exports to more favorable prices, with Russia exporting 1.12 million tons last week compared to 0.72 million tons the week before. With projected exports of 52 million tons in 2024, Russia is expected to remain the world’s largest wheat exporter this year, alleviating concerns about supply shortages and exerting long-term downward pressure on prices.

In Ukraine, the winter wheat crop is generally in good condition. The Ukrainian Ministry of Agriculture cited data from scientists indicating that 98-99% of the country’s winter wheat is expected to survive the winter. This is a positive signal for the crop, as typically around 7% of the acreage can be lost to frost and freezing. Since winter wheat accounts for over 95% of Ukraine’s total wheat production, this could also drive selling pressure in the market today.

With continued pressure from the Black Sea region supply, the downtrend in wheat prices is likely to persist in the medium term. However, technical support at the previous low of 550 - 555 and an RSI indicating an oversold condition suggest that wheat prices might experience a short-term upward correction during today’s session.

Source: MXV