Wheat prices have moved higher as the market begins to question the stability of the ceasefire between USA and Iran. Indeed, any renewed tension in the Middle East could once again disrupt supply chains and raise the prices of important agricultural inputs, particularly fertilizers.
Tensions rise only shortly after a cease-fire agreement is signed. Disputes between the US and Iran over whether Israeli strikes in Lebanon violate the deal show the situation remains very fragile, according to the market. It is this uncertainty that increases fears of further escalation of the conflict. Wheat is more sensitive than other crops to such a risk because it requires a large amount to grow nitrogen fertilizers. At the same time, they are strongly linked to trade flows through Strait of Hormuz, which is one of the key world routes for transporting energy and raw materials for the production of fertilizers. But it is not only geopolitics that supports prices. At the same time, the market is watching drought in the American Great Plains and the deteriorating crop condition, which the US Department of Agriculture has previously pointed out USDA. This is also why wheat has been outperforming corn and soybeans in recent days. The most active wheat futures added up to 0,7 % and corrected some of the previous losses that came after the market calmed down after the ceasefire was announced. Investors are now also waiting for a new report WASDEwhich, according to analysts' estimates, could show a decline in US wheat stocks.
Graf WHEAT (H1)
The price of wheat is trading around 584,88 USD and after rebounding from a strong support zone in the band around 576,69 USD trying to stabilize. In the last hours, there is an effort by buyers to return to the upside, but currently the market is hitting a close moving average EMA 50 on the level 586,27 USD, which works as a short-term resistance for now. Above the price also remains SMA 100 on value 593,64 USD, which confirms that the broader short-term trend is still rather cautious to neutrally bearish. RSI is located on the value 49,9, that is, near the neutral zone, which indicates a balanced ratio between buyers and sellers without clear overbought or oversold. Momentum is held slightly above the surface 100which suggests a slight improvement in short-term dynamics and supports the scenario of another technical rebound. But wheat would need to get above the area to confirm stronger growth 586–594 USD, where important technical barriers are located.
Source: xStation5
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