Wheat futures split on Wednesday against a backdrop of plummeting equities. In the short term, supply concerns loomed large: Russian drought and an export ban raised fears that a global supply shortage might ensue, or that export contracts might not be honored. CME wheat for September 2010 delivery rose 6.2 cents to $7.01 per bushel.
More price support came from comments by Ukraine, one of the world’s biggest exporters of grain, that it might cap wheat exports in response to the shortages, reported the Financial Times.
The World Bank, said the FT, is urging grain-producing nations not to engage in protectionist moves which could create another surge in food prices. “Export bans, while understandable from a national view, are counterproductive at the international level because they trigger hoarding and lead to further price distortions,” Ngozi Okonjo-Iweala told the FT.
On the other hand, longer-term wheat futures dropped: CME wheat for March 2011 delivery fell 7.2 cents to $7.374 per bushel, while July 2011 wheat slipped 27.2 cents to $6.862 per bushel. There’s some perception that long-term pessimism about supply may be overdone.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.