Wheat futures reversed earlier declines and gained 0.69 percent on Wednesday, rising to 688.50 cents per bushel on the Chicago Board of Trade. The focus was once again on Russia’s export bans and Ukraine’s tariffs, which threaten to restrict the global supply of wheat, particularly to poor countries which depend on those crops.
The Associated Press reported on the situation in Egypt, which is becoming increasingly dire. Half of the nation’s 80 million rely on subsidized bread – and Egypt imports over half of its wheat from Russia.
In 2007 and 2008, rising food prices caused breadlines, riots and social unrests in this massive but extraordinarily poor country. Subsidizing bread and wheat cost the Egyptian state over $3 billion per year, according to the news service.
It’s no picnic in Russia, either, which has lost a third of its harvest to blazing temperatures and drought. Fires have scorched Western Russia, blanketing the country in smoke and, some say, toxic fumes.
Amidst this chaos, importers around the world are striving to get the grains they need. “There’s still a need for wheat,” Larry Young of Covenant Trading told Bloomberg News. “Other countries still need to buy, so the demand is there.”
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.
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 trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.