Has the wheat market bottomed out?

The September contract on the Matif yesterday at €350 per tonne. That is €7,25 lower than the closing price for the weekend and the lowest level since February 28. Wheat prices were also down on the CBoT, closing at $9.04 per bushel, or a loss of 2%.

The indicators in the technical analysis show that the downward momentum in the wheat market is strong. Progress in the wheat harvest is perhaps the most important driver putting pressure on the price. In the US, 41% of the winter wheat acreage has now been threshed, according to the USDA's Crop Progress report published yesterday (Monday, June 27). That is an advantage of 6% compared to the five-year average and the harvest is therefore ahead of expectations. That supported the downward momentum in the market.

Signs of revival
Some analysts are starting to cautiously speculate whether the bottom in the wheat market has now been reached. Today (Tuesday, June 28), prices are again cautiously positive during the first trading hours. At the time of writing, the Matif is at plus 1,4% and the CBoT at plus 2,2%. Over the last three months, the wheat price is now at its lowest point and the support level is around €348 per tonne. That could be a trigger for speculators to get back in and that seems to be happening. The market has the potential to bounce back in the short term, analysts expect.

The major uncertain factor remains the export of wheat from the Black Sea region. There is intense negotiation about this, but little concrete progress has been made. If a breakthrough occurs in the short term, a further decline in the wheat market is likely. If we continue to muddle through with half-baked solutions, the wheat price will remain at a relatively high level in the coming months. We do have to take major price fluctuations into account.