Canada Markets

European Milling Wheat as a Gauge of the Russia-Ukraine War

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
The September European wheat faces resistance. For two consecutive sessions, the daily high has failed at the resistance line drawn from the May 17 high. The first study shows the Sept/Dec spread falling this week, while the second study shows the stochastic momentum indicators drifting sideways. The histogram bars on the lower study show the daily volume falling for a second day and to the lowest seen since June 10. (DTN ProphetX chart)

European milling wheat on the Euronext Exchange closed EUR 1.25/metric ton (mt) higher Thursday at EUR 341.25/mt, with help from a weaker euro trade against the United States dollar. Trade ranged within Wednesday's range in a sideways move, while so far this week, the week's high has come within EUR .25/mt of last week's high and the week's low has come within EUR .25/mt from last week's low.

Over the past two sessions, the highs failed to sustain a move above the downtrend line drawn from the high reached on May 17, with resistance at EUR 345.59/mt. Trade also faced selling pressure during moves toward this resistance line in both June and earlier in July.

The September/December spread on the first study shows the spread reaching a bullish inverse of EUR 17.25/mt early this week while closing at EUR 12.50/mt Thursday. This remains bullish, although less so; over the past five years, this spread is shown as a carry each year on this date (December trading over the September), while averaging at minus EUR 3.10/mt on July 28 over the five years.

The chart also shows the 50-day moving average (blue line) on the verge of moving below the 100-day (green line). Thursday's close has the 50-day calculated only EUR 2.34/mt above the 100-day. While this is not as bearish as the Death Cross formed when the 50-day crosses below the 200-day moving average, it would still indicate a bearish scenario of a shorter-term moving average crossing below a longer-term moving average.

The volume bars on the lower study point to a growing lack of urgency, with the daily volume in the September contract at 11,864 contracts Thursday, the smallest daily volume reported since June 10.

The European market is the first market to react to the situation facing Ukraine. Indeed, exports are higher so far this crop year, with the European Union showing cumulative exports of 1.404 million metric tons (mmt) after four weeks of the 2022-23 crop year, up 36.3% from the same period last crop year.

Despite the many challenges faced in moving substantial volumes out of Ukraine's Black Sea terminals, the market seems content with the possibility of success in this operation.

Cliff Jamieson can be reached at

Follow him on Twitter @Cliff Jamieson


To comment, please Log In or Join our Community .