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Wheat Futures were trading about 0.7% lower around $6.3 per bushel in the July contract as the market rolled from the May contract on April 23.

• Wheat futures in the US have increased to $6.3 per bushel from the lowest in over two years as concerns over a trade corridor from Ukrainian Black Sea ports have led to a slight trimming of ample supplies from other major producers.
• The deal, which is in ongoing talks, may not be extended past May 18 if Western states lift sanctions that facilitate international payments to Russia.
• Despite the slight price increase, wheat prices are still down 20% year-to-date due to strong production elsewhere.
• The planting area in the US has grown by 9% last winter, reaching the highest level in eight years, while recent rains in the Plains have eased drought concerns.
• The crop from top exporter Russia is estimated to reach 78 million tonnes in 2023, which is below last year’s record but still high by historical standards.
• Quarterly results from Russia’s key grain producers indicate weak domestic demand, but shipments from Russia are expected to remain robust.

From a technical price perspective, the Wheat futures have traded lower for three consecutive days, targeting the lower extreme of the month and moving out of the Quarter’s value area towards the lows from early May. If buying pressure does not emerge at the month’s developing value area low, the price could drop further towards the decade’s lower extreme. The market may establish a balanced price range between 610 and 662.

The prices might be pressured by higher interest rates, as the central bank tries to fight inflation with a tightening cycle. However, today’s inflation read of 4.9% vs 5.0% might be supportive, as the Fed could ease sooner than expected.

The intraday perspective may find some buying interest around the prior day’s lows, with absorption leading the market back to the swing highs, while the prior VWAP close level serves as a selling level.

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