Wheat price forecast: WASDE report points to oversupply concerns

June 13, 2023 05:11 PM AEST | By Invezz

Wheat price forecast: WASDE report points to oversupply concerns — Image source: Invezz

Demand and supply dynamics

Wheat and corn prices jumped sharply after an important dam collapsed in Ukraine, one of the biggest exporters in the world. This dam collapse happened a few days after Russia and Ukraine extended a grain export deal.

The dam’s collapse meant that the war will escalate for a longer period. It also meant that the export deal could be disrupted in the coming months. Most importantly, there were concerns that the flooding that ensued could affect the huge agricultural fields.

The wheat price also reacted to the latest WASDE report by the US Department of Agriculture (USDA). This report estimated that the wheat market will be characterised by higher demand and supplies.

Globally, supplies are expected to jump by more than 10.8 million bushels, with most of them coming from Russia, India, EU, and Ukraine. Russia will produce over 3.5 million more bushels this year while India will boost it by about 3.5 million bushels.

While the war in Ukraine is continuing, the country is expected to produce more wheat this year. It will produce over 1 million bushels more, helped by favorable weather.

At the same time, demand is set to jump by more than 4.4 million bushels to over 796 million. This increase will come from China, Russia, and India. Therefore, there will be a supply deficit of about 270 million bushels since global demand will be 1,066 million.

Wheat price forecast

Wheat chart by TradingView

The daily chart shows that wheat has been in a strong bearish trend in the past few months. In this period, it has remained below the 50-day exponential moving average. Despite the recent rebound, it remains below this MA, signaling that sellers are still in control.

The Relative Strength Index (RSI) has moved above the neutral point at 50. Therefore, I believe that wheat prices will resume the downward trend in the coming days and retest the year-to-date low of $567.3. The bearish view will be invalidated if the price manages to clear the 50-day moving average.

The post Wheat price forecast: WASDE report points to oversupply concerns appeared first on Invezz.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.