In one of our posts earlier this week, we briefly mentioned wheat and the fact that the biggest exporter Russia has halted exports until July. This happened after the Russians set a quota for sales which was hit. The reason behind this is that the Russians want to make sure they are able to supply their local market amid the Covid 19 pandemic.
Would this lead to increased prices due to smaller supply? Technically speaking other suppliers can try to meet the demand, however due to the dry weather, it's expected that the potential harvest this year would be lower than expected. Some countries could tap into their reserves to try and counteract the temporary removal of supply. It is however possible that this supply shock could lead to potential increase in wheat prices in the short term.
From a technical perspective, if we have a look at Wheat charts, we can see that prices are currently heading lower towards the 500 mark, where a potential support zone lies. The support zone is between the March low of 490.63 and the 500 handle. Traders who are looking at a potential move to the upside, could find the levels of 585.63 and 591.13 to be of interest. That's where a resistance zone has formed earlier this year.
Any opinions, news, research, analyses, prices or other information contained in this post is provided as general market commentary and does not constitute investment advice.
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