Wheat prices continue to achieve new highs, and before going into the weekend, another surge was caused by an agricultural report from a US group saying production via farming in the coming months will be lower than expected. Crop sizes came in with numbers below expectations for the US, Canada and Russia. Limited supply typically means higher prices.
Wheat prices which were showing signs of eroding as of the 9th of August began to steady and on Thursday, then they rocketed upwards and before going into the weekend, prices of the commodity were once again testing April record values. For the unfamiliar speculators who are suddenly turning their attention to wheat as a prospect for bright outcomes and enjoy rollercoaster fluctuations in value, this commodity is for you.
The price being issued by trading platforms and the one shown here is the forward month via ‘future contract’ values which are represented by months extending into the calendar year. Traders need to understand that the price they are most likely seeing is the month closest to the current cash price within the commodity marketplace.
Traders who are unfamiliar with trading commodities such as wheat should take a moment to understand what they are about to embark on. Speculating on wheat and other commodities is nothing short of volatile; this is where tactical risk management was essentially born because of the need to protect trading accounts against the threat of substantial price changes.
While buying wheat may seem to be a ‘no brainer’ due to it challenging technical highs and the US-issued agricultural report last week, traders are reminded to be on the lookout for violent reversals. There is a large of amount of trading volume within wheat, but its ability to climb incrementally is not for the weak of heart. Wheat was trading near 720.00 late last week before rocketing higher. The commodity’s current price near 770.00 is nearly fifty cents higher which is a substantial value change and depending on the amount of leverage being used can make or lose a fortune in a hurry.
Wheat, besides relying on government reports, is prone to seasonal speculation due to forecasts from the farming world which talks about changes in the weather too. Wheat is also an outright speculative commodity because of large positions being taken by mega traders. If you are tempted to buy wheat in the short term, please make sure you are using adequate stop loss tactics and a cautious amount of leverage. If wheat breaks the 772.00 juncture higher, the commodity could be ready to challenge the 774.00 to 777.00 prices in a fast manner.
Wheat Short-Term Outlook:
Current Resistance: 771.50
Current Support: 758.00
High Target: 780.00
Low Target: 740.00
