Volatility has surged across commodities this week, driven by central bank policy shifts and renewed supply concerns, particularly in wheat markets.
Commodities are essential raw materials used by both consumers and industries. Their prices are influenced by global economic forecasts, supply-demand imbalances, seasonal factors, and both anticipated and unexpected disruptions to production or logistics.
To track broad market trends, traders often refer to the Bloomberg Commodity Index (BCOM).
Wheat, one of the first ever traded commodities, has contracts listed on futures exchanges such as the Chicago Board of Trade (CBOT). While institutions primarily use futures, retail traders can also gain exposure via CFDs.
The wheat market has experienced sharp price swings over the past five years, notably triggered by Russia’s invasion of Ukraine and escalating drought risks tied to climate change. These events have raised long-term concerns over global food security.
To stay informed on wheat supply conditions, traders monitor several key reports:
WASDE (World Agricultural Supply and Demand Estimates) – released monthly, typically around the 10th
USDA Weekly Crop Progress – published every Monday
Weather updates and forecasts – including NOAA climate models
Geopolitical developments in the Black Sea region are also critical. Recent reports indicate severe drought conditions in Russia’s Rostov region, a major wheat-producing area.
Let’s take a look at longer-term charts to spot trends and longer-run support and resistance levels for Wheat trading as high volatility is expected for the times to come.
Wheat has been mostly range-bound in the past 20 years, with 2 periods of major uptrends
The first was in 2006-2008, as producer regions got hit with major droughts at the same time as spikes in Oil prices led to high fertilizer costs
The second in 2022, as Russia invaded Ukraine, which created major supply fears
These spikes are usually met with subsequent major corrections as producers use higher prices to sell future productions on Futures exchanges to find other ways of agriculture.
Lower Oil prices also has a dragging effect on wheat prices due to export costs and general production costs lowering.
Major Support is found between $4.5 to $5, where prices are currently bouncing and except for the $13 to $14 spikes, the Major monthly resistance is closer to $9.
