WHEAT

After a dry summer and a global scale drought, agricultural commodity prices moved higher resulting in returns in excess of 30%. From those, wheat and corn were sharply higher when compared with other soft commodities like coffee, cocoa, cotton & sugar. Sharp spike in wheat prices pushed the agricultural commodity from 600 to 950 levels in less than two months. Wheat price reached 947 levels by the end of July. Since the beginning of August it has been relatively quiet for agriculturals. Over the past three months wheat price has been consolidating above 840 levels; a medium-term support level. Short/medium-term consolidation took a bullish flag or pennant shape that is now closer for a decisive breakout. While bullish flags and pennants are usually continuation patterns in an ongoing trend, a safe way to trade these set-ups is to wait for a breakout as a confirmation. I’ve defined the boundaries of the short/medium-term consolidation. 910 levels act as resistance and 842 levels as support. Breakout in either direction should result in a strong trend and present a good medium-term opportunity. Breakout above 910 levels could target 1,000-1,100 area and breakdown below 842 levels could pull price towards 777 levels.