Wheat prices have climbed over 11.30 USD per bushel in trading and are challenging record prices seen during the financial crisis of 2008. Traders who are inexperienced with wheat should understand the price of 1133.00 is equated via cents. Thus the value of 1133.00 equates into 11 USD and 33 cents, the last two digits after the decimal represent fractional cents ratios.
Wheat has skyrocketed in price the past week due to the war in the Ukraine. Nervous trading on the futures markets, which set the cash price of the commodity and speculate on the future prices via monthly contracts, has demonstrated a massive amount of volatility. The price of wheat could be defined as a hysteria and speculative mode combined. It should also be remembered that outside of the U.S and Canada, that Ukraine supplies many countries with wheat.
The combination of speculative and fundamental question marks is simply fueling a large run upwards regarding price momentum. Traders need to understand that wheat trades very quickly on most occasions, but its pricing at the moment is beyond fast, it is wicked and dangerous.
Speculators must use entry price orders and total risk management tactics while trading their positions. Traders should also be aware that the price of wheat can move so fast that it creates a limit up or limit down situation in which the trading of the commodity is frozen for durations, sometimes the entire day if the surges have occurred too close to one another.
To give a clue regarding the amount of value wheat has gained, the past year has produced a nearly 75% gain in the commodity. The past five days have created a gain of nearly 21.50% rise in prices. In other words if you like trading cryptocurrencies, you may find wagering on the direction of wheat to your liking.
The million dollar question is when the surge higher in wheat prices will stop. Yes, the price can certainly go higher and it may challenge the 1200.00 juncture. However, at some point the value of wheat will start to decrease, the question is when. Because energy prices are increasing, this will make farming more expensive and the costs of logistics while moving wheat from fields to suppliers will also face rising costs.
Traders need to be extremely careful when wagering on wheat, it is not for people who are weak hearted. In the short term wheat prices may actually increase, ‘may’ being the crucial word, but one thing is guaranteed the price of the commodity will be very volatile.
Wheat Short Term Outlook
Current Resistance: 1150.00
Current Support: 1120.00
High Target: 1172.00
Low Target: 1101.00
