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Wheat Futures (Dec 2014)Wheat Futures (Dec 2014)Wheat Futures (Dec 2014)

Wheat Futures (Dec 2014)

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ZWZ2014 trade ideas

wheat analysis feb 2024-longeveryday look for buy signals in the wheat because it has shown strong confirmation and weight of evidence that from bouncing strongly off a support line that goes back about the year it has showed that it is at the end of a downtrend cycle and it has started going up showing that it is in the distribution phase of a cycle and it shows signs of going up for a respectively long time and so I will enter entry levels and stop loss levels at a later time but for now know that
CBOT:ZW1!Long
by stlgotachnc
1
wheat-february analysis-longeveryday look for buy signals in the wheat because it has shown strong confirmation and weight of evidence that from bouncing strongly off a support line that goes back about the year it has showed that it is at the end of a downtrend cycle and it has started going up showing that it is in the distribution phase of a cycle and it shows signs of going up for a respectively long time and so I will enter entry levels and stop loss levels at a later time but for now know that
CBOT:ZW1!Long
by stlgotachnc
The Wheat Revelation: A Privilege to See the CodeThe Wheat Revelation: A Privilege to See the Code "You’ve always felt it—the hum of something deeper beneath the markets, the unseen forces at play. Today, you are invited to glimpse the truth." The Commitment of Traders (COT) strategy has unveiled another red pill: the Wheat market is primed for a bullish move. This is no ordinary signal; it is a rare alignment of forces, a convergence of codes that point to a potential market shift. But we do not act blindly. We do not rush headlong into the storm. Instead, we wait for the signal—a confirmed bullish trend change on the daily timeframe. Patience will unlock the reward. Let me show you the code: CODE 1: The COT Index The commercials, the smartest players in the market, are very long relative to the 26-week index lookback. This positioning is not noise; it’s a whisper from those who understand the market’s heartbeat better than anyone else. CODE 2: Net Positioning Extremes Commercials are hovering around their maximum long positioning since December 2023. But it gets better: we see the "Bubble Up" phenomenon between the net positions of Commercials and Large Specs. This divergence is a hallmark of major market turning points. CODE 3: Open Interest The recent multi-week downtrend has coincided with a large increase in Open Interest. The question is: who is driving this increase? The answer is as bullish as it is clear—Commercials are loading up, signaling a seismic shift beneath the surface. CODE 4: Valuation Wheat is undervalued relative to US Treasuries. This imbalance cannot persist indefinitely. Markets correct, and when they do, the opportunity to ride the wave is immense. CODE 5: True Seasonal Strength Seasonality is on our side. History tells us that Wheat often exhibits strength until May, and this year appears no different. CODE 6: Accumulation The code is crystal clear: Bullish spread divergence between front and next-month contracts. Indicators like POIV, Insider Accumulation Index, and ProGo point to heavy accumulation by smart money. CODE 7: Large Speculators Moving to Buy Side In this week’s COT data, we see the Large Speculators reducing their shorts. The Large Specs are the ones that will drive a trend. It appears that maybe, the large specs see what you and I see, and are preparing for an impending bullish move. Other Signals of Strength Technical indicators like %R, Ultimate Oscillator, and Stochastic all converge, painting a picture of imminent bullish potential. What Does This Mean for Us? We do not jump into the market simply because the conditions are ripe. Instead, we wait for confirmation. A bullish trend change on the daily timeframe is the key that unlocks the door. Until then, we prepare. We watch. We wait. Are you ready to see beyond the noise of the markets? To decode the signals others overlook? Follow me for more insights, and if you’re ready to take the red pill, join me on this journey to uncover the truth behind the markets. The choice is yours.
CBOT:ZW1!
by Tradius_Trades
ZW | Wheat | InfoCBOT:ZW1! The Wheat Futures (ZW) market is currently in oversold territory across all timeframes. On the 30-minute chart, the RSI is below 10, a condition that is exceptionally rare and indicative of potential exhaustion in selling pressure. Analysis: Overall Trend: The overall trend remains bearish, as confirmed by the series of lower highs and lower lows visible on the chart. Expectation: Despite the bearish trend, I anticipate the possibility of a counter-rally from the current levels. However, there is a lesser probability of the price moving further down to test the next major support, which I have identified as the extreme pain point. Actionable Plan: Key Levels: The chart features clearly marked Bullish (530’4) and Bearish (527’4) lines. These serve as critical breakout zones. A break above 530’4 signals a safer entry for a long position, targeting the bullish retracement levels. A break below 527’4 confirms further downside momentum, justifying a short position, targeting the bearish support levels. Price Targets: Bearish Targets: Calculated based on support zones, with the immediate levels at 520’0 and 514’2. Bullish Targets: Based on Fibonacci retracement levels, which align precisely with key resistance areas. Conclusion: I recommend waiting for a confirmed breakout of either the Bullish Line (530’4) or the Bearish Line (527’4) before entering a position. This approach minimizes risk while capitalizing on the momentum toward clearly defined price targets.
CBOT:ZW1!
by shkspr
Unlocking the Wheat Matrix: The Code to Dominating CommoditiesUnlocking the Wheat Matrix: The Code to Dominating Commodities What if I told you there is a way to see the hidden signals of the market? To move not with the herd but ahead of it, where clarity reigns and profits follow. This week, we delve into Wheat (ZW) — a market where the COT strategy reveals its secrets. The choice is yours: read on and learn, or remain blind to the patterns all around you. Decoding the Setup Understand this: this is not an invitation to blindly leap into the market. No, we wait. Patience is the cornerstone of mastery. When the technical tools confirm the market’s strength, only then do we act. Now, let’s break down the wheat matrix: Code 1: Commercial and Small Speculator Positioning The Commercial COT Index, using a 26-week lookback, reveals that commercials are at an extreme in long positioning. At the same time, the Small Speculator COT Index shows small specs aligning at a similar extreme. In the wheat market, unlike others, we follow the small specs rather than fading them. A deviation from the norm—an anomaly in the matrix. Code 2: Commercial Extremes in Net Positioning Commercial entities are nearing their most bullish stance in three years. History whispers a truth: when commercials move like this, the market often follows. Code 3: Contrarian Signal from Investment Advisors The masses of investment advisors are overwhelmingly bearish. Against this backdrop, the extreme bullish positioning of commercials sends a powerful contrarian signal. The matrix is showing its hand. Code 4: Valuation Metrics Wheat stands undervalued against U.S. Treasuries. When value aligns with positioning, the code becomes clearer. Code 5: Seasonal Patterns Seasonal truths tell us that wheat’s true bottom often forms in early January. This aligns perfectly with the cyclical and technical signals currently emerging. Additional Signs in the Matrix Spread Divergence: Bullish spread divergence between front and next month contracts. Accumulation Indicators: Insider Accumulation Index and Williams ProGo confirm accumulation. Technical Tools: %R is in the buy zone, and Weekly Ultimate Oscillator Divergence further supports the bullish narrative. Cycles: The Recurring Patterns 44-Month Cycle: A major bottom forms now. 830-Day Cycle: Signals an upward move into March. 151/154-Day Cycles: Align with a cyclical bottom occurring now, projecting strength into March. The Red Pill of Action With these signals converging, the urge to act immediately can feel irresistible. Don’t. The matrix requires patience. Let the market reveal its strength. When the time comes, you’ll ride the wave with confidence. The Path to Mastery Trading isn’t merely a series of moves; it’s a philosophy. The COT strategy is a key, but only those who seek mastery will unlock its full potential. If you’re ready to see the market for what it truly is, join Tradius Trades. Here, we don’t just navigate the matrix of commodities—we redefine it. Are you ready to free your mind?
CBOT:ZW1!Long
by Tradius_Trades
Options Blueprint Series [Basic]: H&S amid Surging Wheat Supply1. Introduction: Bearish Opportunity in Wheat amid Rising Supply With the U.S. Grain Stocks Wheat (USGSW) report showing a notable rise in wheat stock levels, a bearish scenario is unfolding for wheat futures. This increase in supply, which could drive prices downward, aligns with a technical setup showing potential for a bearish breakout. From a technical perspective, Wheat futures exhibit a Complex Head and Shoulders formation, signaling a possible breakdown as prices approach a critical support level. By combining the supply dynamics and technical formation, this article outlines a Bear Put Spread strategy, ideal for capitalizing on this bearish outlook with limited risk. 2. Fundamental Analysis: Rising Wheat Stock Levels The most recent USGSW report has recorded wheat stock levels breaking upward to 1.98 billion bushels, up from the previous level of 1.779 billion bushels. This shift indicates a higher supply of wheat available in the market, which, in the absence of proportional demand, typically should result in price pressure to the downside. Higher wheat stock levels often dampen demand sentiment, as markets anticipate reduced scarcity and increased availability. Such fundamentals offer a conducive backdrop for a bearish approach, supporting the downside breakout anticipated in the technical setup. 3. Technical Analysis: Complex Head and Shoulders Formation The technical landscape for Wheat futures supports the bearish case, with a Complex Head and Shoulders pattern forming on the chart. This pattern is characterized by multiple peaks (heads) flanked by smaller peaks (shoulders), indicating a potential reversal from recent highs. The critical neckline for this formation sits at 585'6. A break below this level would signal the likelihood of further downside movement. The target for this setup aligns with a UFO support zone at 552'4, which serves as an optimal price point to close the trade if the breakout confirms. 4. Trade Setup: Bear Put Spread on Wheat Futures (Ticker: ZWH2025) To capitalize on the bearish setup, a Bear Put Spread is employed. This strategy allows for limited downside risk while still offering attractive profit potential. Here are the specifics: o Contract Details for ZWH2025 (Wheat Futures): Contract Size: 5,000 bushels Tick Size: 1/4 of one cent (0.0025) per bushel (equivalent to $12.50 per tick) Point value of 1 future unit: $50 Point value of 1 option unit: $50 Expiration: December 27, 2024 Margin Requirement: While the exact margin depends on the broker, the requirement typically ranges between $1,500 and $2,000 per futures contract. The margin for a Bear Put Spread in Wheat futures options is limited to the debit paid (15.2 points *$50 = $760). o Options Strategy: Bear Put Spread Buy the 585 put option at 25.84 and Sell the 550 put option at 10.64, both expiring on December 27, 2024. The net debit paid is 25.84 – 10.64 = 15.2 points = $760 This spread provides a capped-risk opportunity for profiting from a downside move in Wheat futures. o Risk Management: While stop loss orders can be used, no stop loss is required given the limited-risk nature of the Bear Put Spread. The maximum potential loss is predefined by the cost of the spread. 5. Options Risk Profile Analysis The Bear Put Spread strategy involves buying a put option at a higher strike price (585) and selling a put option at a lower strike price (550). This configuration: Maximizes potential profit if Wheat futures drop to or below the 550 level by expiration. Caps maximum loss at the initial cost of the spread, regardless of how the underlying Wheat futures move. For this setup, the maximum potential profit is the difference between the strikes (585 - 550) minus the premium paid = 19.80 ($990). The maximum potential loss is the cost of the spread, making it a controlled-risk strategy suited to volatile or downward-trending markets. 6. Trade Execution Plan Entry: Initiate the Bear Put Spread as Wheat futures break below the 585'6 neckline, confirming the downside breakout. Target: Close the trade at 552'4, which aligns with a nearby UFO support zone, marking a logical exit point. 7. Risk Management Considerations Effective risk management is essential in any options strategy, and the Bear Put Spread inherently offers several risk control advantages: Limited Risk: By buying a put and selling a lower-strike put, the Bear Put Spread creates a defined risk position, capping potential losses at the initial premium paid for the spread. No Stop Loss Required: With maximum risk predetermined by the cost of the spread, there's no need for a stop loss, which could otherwise be triggered prematurely in a volatile market. Predefined Entry and Exit: This strategy's effectiveness hinges on precise entry (below the 585'6 neckline) and a clear target at 552'4. By maintaining these predefined parameters, the trade maximizes its alignment with both technical and fundamental setups. This trade setup offers a balanced approach, allowing for downside exposure with risk under control, making it well-suited for periods of volatility or substantial downward moves. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. Also, some of the calculations and analytics used in this article have been derived using the QuikStrike® tool available on the CME Group website. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CBOT:ZWH2025Education
by traddictiv
2
Wheat FuturesThere are a few potential bearish momentum indicators present in the chart that suggest the price of Wheat Futures may continue to decline. The price of Wheat Futures dipped below its middle moving average. This could indicate bearish momentum, especially if the price stays below this line. Higher volume accompanied the recent drop in the price of Wheat Futures. This could signal stronger selling pressure. The price of Wheat Futures recently touched the upper Bollinger Band but has since retraced downward toward the lower half of the band. This suggests that the recent uptrend may be losing momentum or consolidating. The trend for the price of Wheat Futures appears to have been mostly downwards, with a few rallies. The recent rejection near the moving average and a return to lower levels could suggest that the downtrend may continue unless a strong support level is found.
CBOT:ZWZ2024Short
by Sahrin
Wheat Futures Are at a Crossroads – Here’s What I’m SeeingAlright, here’s where things stand with wheat futures, and this one feels like it’s balancing on a knife’s edge. We’re sitting right around 571, and honestly, the chart could break either way. Moments like these can be exciting, but they’re also where preparation makes all the difference—whether you catch the right move or get left chasing after it. If the price drops below 564, we could see it slide down to 554, 543, and maybe even 535. This kind of move would likely mean that supplies are holding strong, or demand is weaker than expected. It might not happen all at once, but once that first level breaks, sellers could pile on, and each support level below becomes the next stop on the way down. It’s like the market testing where buyers are willing to step back in. But if the bulls get their act together and push above 600, the game changes. That’s the kind of breakout that could attract a lot of momentum and send prices heading toward 620. It wouldn’t take much—maybe bad weather affecting crops or surprising export numbers—and suddenly, we’d see buyers jump back in with force. When a psychological level like 600 cracks, traders love to pile on, and things can move quickly. This is one of those trades where you’ll want to stay sharp. Just watch the levels, have a plan, and let the market show you the way. Whether it’s a slide down or a breakout higher, there’s opportunity either way. If this breakdown helped, like, boost, follow, and drop a comment—always better when we trade together. Mindbloome Trader
CBOT:ZW1!
by Mindbloome-Trading
ZW - Long (Key Zone Test)We identify a potential long entry opportunity after a key support test. The entry level is set at a support zone that has been tested multiple times, proving to be a key reaction point. The stop loss is placed just below the support to limit risk in case of a bearish breakdown, while the take profit is located at the next resistance level, where we expect the price to reach after a bounce. The overall trend remains bullish, supported by the EMA100 confirming long-term momentum. We will also look for reversal candlestick patterns or indicators like RSI and ADX for additional entry confirmation. This setup is based on a 30 minute timeframe, using Heikin Ashi candles to better visualize price movement
CBOT:ZW1!Long
by fabrandt
1
Momentum Shifting in WheatWheat Technicals (December) The 20-day moving average was the theme for many markets on Friday, and wheat was not exempt. The market staged an impressive rally to close out the month, but there are still technical headwinds for the market. The key price pocket to keep an eye on to start this week's trade comes in from 539 1/2-542 1/4. The Bulls will need to see this defended on a closing basis to prevent a retest of the recent lows. First resistance remains intact from 555 1/2-556 1/4. Short Term Bias and Technical Levels of Importance Bias: Neutral/Bullish Resistance: 555 1/2-556 1/4****, 571 3/4-574 3/4*** Pivot: 539 1/2-542 1/4 Support: 526 1/4-527***, 514-517**** Check out CME Group real-time data plans available on TradingView here: www.tradingview.com Disclaimers: CME Real-time Market Data help identify trading set-ups and express my market views. 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 *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. Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZWZ2024
by Blue_Line_Futures
1
Can We Unravel the Mysteries of Wheat Market Stability?In an era of interconnectedness and unprecedented challenges, the global wheat market stands as a critical linchpin of food security. Its intricate interplay of supply, demand, and geopolitical factors has profound implications for the world's ability to feed itself. The wheat market, a cornerstone of global agriculture, is subject to numerous forces that can disrupt its equilibrium. Climate change, with its increasing frequency of extreme weather events, poses a significant threat to wheat production. Droughts, floods, and heatwaves can devastate crops, leading to shortages and price volatility. Additionally, the geopolitical landscape is fraught with tensions that can impact wheat trade. Conflicts, sanctions, and trade disputes can disrupt supply chains, limiting access to essential food commodities. Moreover, the growing global population, coupled with changing dietary habits, is placing increasing pressure on wheat production. As incomes rise, consumers are demanding more diverse and protein-rich diets, which can drive up demand for wheat-based products. This increased demand, combined with the challenges posed by climate change and geopolitical instability, creates a perfect storm of uncertainty for the wheat market. The future of wheat, and by extension, the global food system, hangs in the balance. Can we unravel the enigma of wheat market stability, or will the challenges posed by this vital commodity prove insurmountable? The answer to this question will determine the extent to which we can ensure food security for generations to come.
CBOT:ZW1!Long
by signalmastermind
2
Is Wheat Climbing the Wall of Worry?Wheat Technicals (September) Wheat futures traded lower in yesterday's trade after failing against the previous day's high. That failure snapped a five-day winning streak but wasn't enough to do change much more on the technical landscape. Those high prints from the prior two sessions will act as first resistance at 548 3/4, above that is a more significant resistance pocket from 555 1/2-556 1/4. This is illustrated on the chart below where you can see it acting as more of an inflection point for the market. The Bears have the technical advantage until we see a close above here. Short Term Bias and Technical Levels of Importance Bias: Neutral/Bullish (cautiously optimistic) Resistance: 548 3/4***, 555 1/2-556 1/4***, 590-592*** Pivot: 537-540 Support: 525 1/4-530***, 514-517**** Weekly Export Sales Estimates (released at 7:30am CT) 250,000 to 500,000 MT. Last week's report came in at 286,600 MT, down 7 percent from the previous week and 41 percent from the prior 4-week average. Average Estimates for August 12th USDA Report All Wheat Production: 2.014 billion bushels 24/25 Ending Stocks: 861 million bushels Below: Daily Chart of September Wheat Futures, depicting resistance and a potential inflection point for the market from 555 1/2-556 1/4. Check out CME Group real-time data plans available on TradingView here: www.tradingview.com Disclaimers: CME Real-time Market Data help identify trading set-ups and express my market views. 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 *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. Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZWZ2024
by Blue_Line_Futures
US WHEAT, still a bit to the downsideUS Wheat futures. 2022 Ukraine-Russia War spiked prices to the 13.000$. Since that moment, prices have retraced to the 550$ levels. Notice the useful trend lines, key pivots for reversals. Also, AVWAP (in purple) since the 2022 highs has been a key line to watch for lately, as short sellers will try to push the prices to the downside when reached. Elliott countdown also suggests further downside to finish the 5th wave My PT remains in the 500$ area
CBOT:ZW1!Short
by j_arrieta
2
Wheat Futures Continue to Breakdown. Next Stop $5.00? Wheat Technicals (September) September Chicago wheat futures broke below trendline support on Thursday which spilled into additional pressure on Friday and into the start of this week's trade. This price action keeps the Bulls in the driver's seat with little meaningful support until you get closer to the psychologically significant 5.00 level. On the resistance side, our pivot pocket from 525 1/4-530 will be the line in the sand to keep an eye on at the start of the week. Friday's Commitment of Traders report was relatively flat from the previous week. As of July 23rd, Funds were holding a net short position to the tune of 75,184 futures/options contracts. Broken down that is 71,579 longs VS 146,763 shorts. Bias: Neutral Resistance: 537-539***, 553 1/2-556 1/4*** Pivot: 525 1/4-530 Support: 500** Check out CME Group real-time data plans available on TradingView here: www.tradingview.com Disclaimers: CME Real-time Market Data help identify trading set-ups and express my market views. 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 *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. Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZWU2024
by Blue_Line_Futures
After selling off for 2 years$ 418 Low of May 2019 $1284 High of May 2022 $ 540 Low of April 2024 After massive floods in Europe, Asia, and now South America, wheat prices have taken off like a rocket. Commodities are not my specialty, but i have watched this one for years and it's been bought every pull back in the past 2 moths after it was sold every rally for the last 2 years. Even though the price is almost 30% off the last month lows, there is a lot more room to the highs of 2022. Strategy- small size, looking to catch the big move and more importantly to be able to hold on to it. Stop $631 1st Target $900 2nd Target $1,200 let's see how this one goes:)
CBOT:ZW1!
by onlytrade2win
2
ZW: Wheat to Rebound with Fed Rate Cuts and Dollar DevaluationCBOT: Wheat Futures ( CBOT:ZW1! ) On Friday, July 12th, the United States Department of Agriculture (USDA) released its latest World Agricultural Supply and Demand Estimates (WASDE). (Note: The WASDE report is published monthly and provides annual forecasts for global supply and use of wheat, rice, coarse grains, oilseeds and cotton, as well as the U.S. supply and use of sugar, meat, poultry eggs and milk. Today’s analysis will focus on wheat.) USDA’s balance sheet update for the 2023/24 US wheat crop showed a carryout of 702 million bushels (mbu), as exports were taken to 707 mbu. For the new crop, USDA raises the wheat stocks by 98 mbu to 856 mbu. Some of the increases was a larger carryover, but most came in the form of higher production. USDA raised the wheat crop by 133 mbu to 2.008 billion bushels (bbu). Harvested acres was raised from 38.0 to 38.8 million acres. Yield per harvested acres was raised by 2.4 bushels per acre (bpa) to 51.8 bpa. Winter wheat was up 46 mbu to 1.341 bbu, as the Hard Red Wheat (HRW) total was projected at 763 mbu (+37 mbu), with Soft Red Wheat (SRW) at 344 mbu (+2 mbu) and white winter at 234 mbu (+8 mbu). The initial other spring wheat figure was tallied at 577.8 mbu, more than 56 mbu above market estimate. Global wheat stocks were raised by 4.97 million metric tons (MMT) to 257.24 MMT, with a bulk from the US, as both Canadian and Argentine wheat production were raised. Wheat Futures drop across three futures markets, CBOT, KCBT and MGEX, after WASDE shows higher production. • Jul 24 CBOT Wheat closed at $5.38, down 16 1/4 cents, • Sep 24 CBOT Wheat closed at $5.50 3/4, down 20 1/2 cents, • Jul 24 KCBT Wheat closed at $6.04, up 12 3/4 cents, • Sep 24 KCBT Wheat closed at $5.67 3/4, down 16 cents, • Jul 24 MGEX Wheat closed at $6.21, unchanged, • Sep 24 MGEX Wheat closed at $5.97 1/2, down 21 1/4 cents The weekly CFTC Commitment of Traders report showed CBOT wheat speculative traders net short 69,137 contracts as of July 9th, a reduction of 4,837-contract on the week. In KC wheat, they were trimming 2,292 contracts to 40,811 contracts by July 9th. In my opinion, the futures market has quickly absorbed the bearish WASDE report. With wheat trading at historical low levels, a rebound may be brewing in the next few months. Traditionally, August is the time to hedge weather risks in agricultural commodities. If summer weather in the Midwest and Great Plain regions turns out to be less than ideal, the previously expected higher yield will have to be adjusted downward, reducing total production. In today’s market, how could the expected Fed rate cuts impact commodities? Last Tuesday, July 9th, Fed Chair Jerome Powell appeared in a Senate Banking, Housing, and Urban Affairs Committee hearing on Capitol Hill. The Fed Chair expressed concern that holding interest rates too high for too long could jeopardize economic growth. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.” “At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”. The prospect for quicker rate cuts increased immediately after these dovish remarks. According to CME Group FedWatch Tool, the probability of a 25bp rate cut in September is now 90.3%. Futures traders look for 3-4 rate cuts by the end of the year, with a 53.8% probability for the Fed Funds rate lowering to the 4.25%-4.75% range. (www.cmegroup.com) Would the lower interest rates be bullish for commodities like wheat? Firstly, lower interest rates will reduce borrowing costs. This will help business grow, with more jobs, income and consumption coming along the way. At the end, it will help increase the demand for commodities such as wheat. Secondly, as a major agricultural commodity, wheat is priced in the US dollar and traded in the global market. In previous writings I explained that lower interest rates would result in currency depreciation, as prescribed by the Interest Rate Parity theory (IRP). For foreign buyers, dollar depreciation means an appreciation of their local currency. The cost of importing wheat will be lowered when converted in local currency. Lower costs help increase the demand for wheat. Trading with CBOT Wheat Futures The 3-year price chart for CBOT wheat futures shows three distinguished patterns: • From February to April 2022, wheat prices nearly doubled from about $7 to $13. This was driven by geopolitical crisis and the fear of global supply shortage. • From May 2022 to July 2023, the Fed implemented 11 consecutive hikes, which helped cut wheat prices by half to about $6. • From August 2023 to present, as the Fed kept interest rates unchanged in seven FOMC meetings, wheat prices moved sideways in the $5.50-$7.00 range. As we can see here, Fed policy and geopolitical crisis have an outsized impact on wheat prices, as compared with fundamental supply and demand. In my opinion, the supply and demand factors are already priced in the market. However, the impacts from Fed rate cuts and outcome of the upcoming presidential election are not yet fully grasped by the market. The expected Fed loosening cycle would have the opposite effect of the Fed hikes. Wheat prices could potentially move up the $7.00-$9.00 by 2025. On July 12th, the March 2025 contract of CBOT wheat futures (ZWH5) settled at $5.975 per bushel. Each contract has a notional value of 5,000 bushels, or $29,875 at market prices. Buying (long) or selling (short) one contract requires an initial margin of $2,000 at the time of writing. CBOT lists 15 monthly contracts of Mar, May, Jul, Sep, and Dec. Wheat traders could take up positions two years from now, for the month of July 2026. Trading on the 3rd or 4th contract month would satisfy the liquidity requirements while allowing time for market-impacting variables to change, based on my experience. 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. CME Real-time Market Data help identify trading set-ups and express my market views. 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
CBOT:ZW1!Long
by JimHuangChicago
1