Wheat Ends Volatile Year Up 1%, down 62% From Invasion Highs

Chicago wheat futures ended a volatile 2022 up 1.44% above the $7.7 per bushel level with all 3 wheat classes closing out 2022 with solid gains, highlighted by uncertain supply from major producers offsetting lower demand in the global economy. Wheat was still flat on the year despite pulling back 61.8% from the panic highs after the invasion. Russia’s invasion of Ukraine in the end of February triggered a supply halt from the key exporter, while lifting natural gas prices enough to suspend the production of fertilizers in Europe, which threatened a global food shortage and lifted wheat prices to a record-high $12.8 in late May.

Yearly Wheat Closes:

  • March-23 Chicago made a new high for the month, however stopped just below $8 with today high at $7.99. Mch-23 closed at $7.92 up $.16 for the week.
  • March-23 KC rally stopped just short of its weekly high of $8.94 ¾. Mch-23 KC closed at $8.88 up $.13 ¼ for the week.
  • March-23 MGEX reversed yesterday’s selloff closing at $9.38 ¾ up $.07 for the week.

Technical Outlook

Wheat closed under the breakup level in August and 0/8 giving back up the whole October rally. Resistance is now the tenkan and the 50 and 61.8% Fibs. It had been drawn higher by the flat weekly cloud and supported by 0/8 which held. The contract keeps failing to stabilize after it continued its sharp impulsive collapse. This came about after a failure at retesting the 8/8 move and high after it spat 8/8, and the minimum target. It had completed a measured 4/8 correction off highs then broke key support at 38% then 50% and 50wma confluence in the freefall.

Pre-invasion, Russia and Ukraine were responsible for nearly one-third of global exports.

Rosstat issued a Russia wheat production forecast of 102.65 mt, well above the USDA forecast of 91 mt. Earlier in the week SovEcon raised their Russian wheat production to 101.2 mt. They raised their Russian export forecast to 44.1 mt, just above the USDA forecast of 43.0 mt.

The harvest for top exporter Russia was the highest on record in the current marketing year, extending competition into North America. Ukraine continues to face large production and export challenges amid the ongoing Russian invasion. Wheat shipments from Ukraine continued after Russia agreed to extend the UN-brokered deal that guarantees a trade corridor for vessels carrying Ukrainian grain in the Black Sea for another four months, significantly reducing shortage concerns.

The record harvest from top exporter Russia and increased wheat plantations in North America due to lower soybean demand in China also contributed to prices easing back to the yearly flatline by the fourth quarter.

From The TradersCommunity Research Desk