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Wheatfutures

WEAT- an agricultural ETF for wheat futures.WEAT is essentially tracking wheat future contracts of various lengths. Importantly, the war in Ukraine took a disastrous turn when the Russians sabotaged a major dam subjecting thousands of acres of farmland to potential flooding and compromising the cooling pools for the nuclear electric generating plant that services a multitude of people. Urkaine is sometimes called the the breadbasket of the world due to its wheat crops which are due to be harvested. Flooding will disrupt or prevent harvesting altogether. The 15-minute chart here shows movement of WEAT price over the first part of this month. While WEAT does not offer s high reward ROI, it is a low-risk trade for a reasonable return. The issue in Ukraine in dire and will not resolve easily; its impact on wheat prices cannot be overstated.
AMEX:WEAT
by AwesomeAvani
Wheat (World) - Short Bias; Cheap Ukrainian wheat everywhere!Sure, it is winter in the northern hemisphere so why even bother with the grains at all? ... ... Because cheap Ukrainian wheat had absolutely flooded European markets, so much so that very soon they will have to start dumping some of it into the ocean! (Right now, they are trying to air out these mountains of grain, so it wouldn't mold, but that will go only so far.) Normally, this time of the year, 55-60 ships per week get loaded with Ukrainian wheat, headed for Africa and Asia. As of last week, these numbers are down to 19 ships . Russia closed the Bosporus to Ukrainian wheat (and oil seed) shipments. As an alternative solution, Ukraine is shipping most of its harvest to the EU - mostly Poland & Germany - to load it on ships in those ports. - But guess what ... ... shipping it all to Europe AND THEN load it onto ships makes the whole proposition economically non-viable. (Well below producer cost.) So now, the endless trainloads of grains, continuously pouring into the EU, gets dumped all over EU markets (at 40%-60% discounts!) because long empty local silos are all filled to capacity. There is now zero (0) storage capacity left anywhere in Europe! (... and the endless trainloads just keep on coming.) ... making this trade - not a monster - rather a no-brainer. (Like free beer)
CBOT:ZW1!Short
by Nemo_Confidat
10
Corn is at the critical supportAs shipping cost drops we see that corn , wheat , cotton are dropping fast. This is a disinflational signal OR a big recession signal. We will see what is going to happen after today's NFP and unemployment numbers. Corn is at a good support point. It may rise again if we see NFP is lower than expected or an increase in the unemployment numbers. Disclaimer – WhaleGambit. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
FX:CORNF
by WhaleGambit
It’s trading wheaty (pretty) high now...Continuing the topic of spreads between related commodities, the Hard Red Winter Wheat – Soft Red Winter Wheat spread is another one trading at an extreme level now. A brief explanation on the different types of wheat we are referring to here: 1) The Hard Red Winter Wheat (HRW) is the most widely grown class of wheat. A high protein product, used for breads, some types of Asian noodles and general-purpose flour. 2) The Soft Red Winter Wheat (SRW) is the third largest class of wheat variety grown in the US, lower protein wheat used in producing confectionary products such as cookies, crackers, and other bread products. Generally, the HRW Wheat Futures (KE) trades at a premium to the SRW Wheat Futures (ZW) due to the higher protein content, however other factors such as production levels and supply demand dynamics may disrupt this spread, as seen from the wide range it has been trading since 1977. Currently, this spread is trading close to 132 cents, with only one instance where it has traded higher, which was in March 2011 when this spread reached an all-time high of 164. We attribute the spread trading at a high now due to the following 2 reasons: 1) The 2022 HRW production is currently the lowest on record since 1963, due to widespread droughts across many of the HRW production regions. 2) The average protein content of the 2022 yield is higher than last year, as well as the average of the past 5 years, resulting in a higher quality crop. As a result, HRW is trading at a premium as supply shortage and a higher quality product pushes the price higher, while SRW sees average production and quality. While it is challenging to assess the production levels and quality for the next season, from a risk reward perspective, we see an opportunity here. The past few spread peaks have been clearly marked out by Relative Strength Index (RSI) pointing oversold. With the 10-year average for the spread at 6.3 cents and the RSI now oversold, we lean bearish on the spread. Referencing the average of the past 3 declines at 150 cents and lasting 511 days, we could set out trade levels. If the historical pattern holds this time, a conservative target of 120 cents and a trade length of 500 days points us to the 15-cent level. We see the current set-up as an opportunistic one, with similar episodes in the past pointing lower. CME also has the synthetic KC HRW Wheat-Wheat Intercommodity Spread, which can be used to express the same view and is financially settled. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. Sources: www.uswheat.org www.cmegroup.com www.cmegroup.com www.usda.gov
Editors' picks
CBOT:KE1!Education
by inspirante
16
Something is happening with Wheat futuresWheat got nuked in late May, as it re-tested the high. It did a full retrace, -36%. Impressive even for meme stocks let alone one of the most precious commodities on the planet. Wheat has spent Jul and Aug in the area of intense demand, which just happens to be around EMA(100) , from what I can see everyone is waiting for first harvest numbers to start sending futures higher. I'm expecting explosive few weeks, perhaps even hitting $12 again before the first snows in the northern hemisphere. The monthly chart is even more explicit:
OANDA:WHEATUSDLong
by Owcheew8
ZW / WHEAT FUTURESAbout FUNDAMENTAL ANALYSIS . ---We are now in the corn-demand zone and there are many factors supporting the buying. 1-The Ukrainian war. 2- - dehydration. 3-The rise in the price of oil will lead to a rise in the price of transportation. About TECHNICAL ANALYSIS --- we look at (" Sell VOLUME ") and ("Sell pressure") is in decreasing , Volume drives all markets. About Psycho- --- The short sellers start to take their money from wheat market because of a psycho- demand zone.
CBOT:ZW1!
by Gassem_futures
wheatPrecipitation in the EU and the USA and the possible unblocking of Ukrainian ports increase the pressure on wheat prices Against the background of technical purchases, wheat futures on world exchanges rose yesterday: by 0.9% or $2.66/t to $301.1/t – September futures for soft winter SRW wheat in Chicago, by 0.1% or $0.46/t to $319.9/t – September HRW hard winter wheat futures in Kansas City, by 0.9% or €3/t to €340/t or $347.4/t – September wheat futures on Paris Euronext. At the same time, September futures for HRS durum wheat in Minneapolis fell by 0.5% or $1.93/t to $339.6/t, and August futures for Black Sea wheat in Chicago remained at 360.25 $/ton During the first 10 days of the new season, the EU exported 363,944 thousand tons of wheat, which is 24% more than the same figure last year. Today, the markets are waiting for the results of the negotiations on unblocking the ports of Ukraine and accurate data on the auctions in Egypt. However, one should not expect a sharp drop in prices from the decision to resume exports from Ukraine, since realistically supplies will not resume before September, and the daily shelling of Mykolaiv will not allow port terminals to work, especially those owned by foreign companies.
CBOT:ZW1!Short
by HOANGDANH88
Updates of Options Strategy on Wheat FuturesCBOT:ZW1! On June 15th, I issued an options trading strategy on CBOT Wheat Futures. At the time, I expected wheat price to experience a very large move but was unsure of its direction. Consequently, I recommended a Long Strangle options strategy : Purchase both an out-of-money (OTM) call and an OTM put on September Wheat Futures. The original trading idea may be found here: . Let’s review how this trade performed five weeks after its initiation: Initial market conditions on June 14th: • September Wheat Futures (ZWU2) is quoted at $10.54/bushel. • An OTM call with a $12.00 strike price is quoted at 17 cents. • An OTM put with a $9.00 strike is quoted at 4.625 cents. A Long Strangle will cost $1,081.25, as each call and put contract is based on 5,000 bushels of Chicago wheat. This is the maximum amount you could lose if wheat price did not break out the upper ceiling or fall through the lower floor set by the strikes. At this writing on July 18th: a) ZWU2 futures is quoted at $7.81/bushel, down $2.73 or -26%. Our expectation of big price move is proven to be correct . b) Call options with $12.00 strike price is quoted at 10 cents, down 7 cents. Even though futures price declines, there is still time value in the OTC call options. c) Put options with $9.00 strike is quoted at 85.5 cents, up 1749%. Due to the nonlinear nature of options pricing, our put is hugely profitable as it is now $1.19 deep in-the-money. What can we do today? There are two options: 1) Sell both the call and put with offsetting trades. The call would realize a loss of $350, and the put has a profit of $4,043.75, making the combined total at $3,693.75. Taking the $1,081.25 premium we paid upfront as our cost base, gross profit will be $2,612.5 per contract, or +242% return in a five-week holding period. 2) Hold the positions . There are five more weeks left before the August 26th options expiration, and wheat price could make bigger move. For illustration purpose, let’s use today’s price as exercise price. The Call would expire worthless as it is out-of-the-money, and we lose the $850 initial investment. However, by exercising the put, we gain $1.19 (=9.00-7.81) per bushel, and $5,950 per contract. The combined gross profit will be $4,018.75, or +372% . Why does this trade work? The key lies with a properly set-up strategy. It’s time to revisit our Three-Factor Commodity Pricing Model: Commodities Futures Price = Intrinsic Value + Market Sentiment + Crisis Premium In February through May, the Russia-Ukraine conflict put a huge Crisis Premium on wheat price, driving it from $8 to $12-$13, before moving lower to around $10. Since June, surging inflation, aggressive rate hikes, and recession fears overtake supply concerns as the main market driver. As fighting in Ukraine drags on, the impact from crisis diminishes, and Bearish Market Sentiment takes over. Commodities markets from energy, metals to agricultural products all suffered a huge loss. Looking forward, I expect that Intrinsic Value, or traditional supply and demand factors, would come back as key market mover. The recently released World Agricultural Supply and Demand Estimates report (WASDE) from the U.S. Department of Agriculture set a bearish tone in the grain market, sending wheat price to fall further. For our CBOT Wheat Strangle options trade, I favor closing the positions now over holding it to expiration. Here is my reasoning: In a classic economic supply and demand chart, fundamental factors move market price along the supply line and demand line. Price movement tends to be moderate and within a narrow band. This is what the Wheat price chart shows before February 24th. On the contrary, crisis premium pushes either the supply line or the demand line to shift sideway, resulting in big price jumps. In the case of Wheat futures, investors are concerned that a loss of Russian wheat would reduce global supply by as much as 25%. Wheat price responded by a series of limit-up days and jumped 40% in two weeks. Note that daily price limit (up or down) on wheat futures is 70 cents per bushel. In the absence of conflict escalation in Ukraine, volatility in wheat price would likely stay muted going forward. Additionally, time value, which is part of the options premium, will decrease quickly as contract expiration nears. In the Black-Scholes Model, options price is positively correlated with volatility. Expected low volatility combined with diminishing time value will make it difficult for our Long Options to increase in value. This is my argument against holding on to the options. As the likelihood of global recession grows, food crisis will stay on as a major global issue in 2022 and 2023. Famine could hit weaker economies. Agricultural commodities will be a good risk management tool to hedge the rising food cost. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Editors' picks
CBOT:ZW1!Short
by JimHuangChicago
22
Wheat Heading back to $700-800 range, supply surpassed demandWheat Heading back to $700-800 range, supply has now surpassed the demand. Ukraine is now shipping wheat from Moldova and shipping out via train etc Russia is supplying Ukraine wheat from Mauripol Russia is supplying wheat to Bandladesh and a number of African countries Australia has had 20% bumper record crop being on the top 3 wheat producers Price will go back to normal now it has almost been 6 months since the war has started
FX:WHEATFShort
by smartestcookieinthejar