Technically Speaking

All three wheat markets in the last few weeks have shown some signs of strength. It's not so much new demand, but the potential for supplies coming out of the Black Sea to be compromised. Tensions appear to be mounting in the Russia-Ukraine war. There is talk that after the weekend terror attack in Russia the Russian military is preparing to ramp up attacks against Ukraine.

KC July wheat poked its head above a key support area near $5.70 and has its sights set on the 50-day moving average -- just 5 cents above at $5.89. While U.S. export sales and shipments have lagged last year and analyst expectations, any slowing of Russian or Ukrainian wheat exports could translate to more U.S. wheat demand. On a technical note, KC July momentum is positive, and a rally and close above that 50-day average could encourage funds to cover shorts in Chicago and KC, which combined total 118,000 contracts. Also, in the past few weeks, Russian wheat offers have been firming up after having weighed on world wheat prices for months.

May bean oil futures, despite falling Thursday and Friday to end the week, have a few positive technical things going on. The 20-day moving average is very close to crossing over the 50-day to the upside. I tend to think of this as being a forerunner of a trend change. Despite late-week weakness in oil, I look for strong support to emerge at those moving averages in the 46.85 to 46.95 area. Currently, the May bean oil price is nearly 1 cent above that key support area. Fundamentals continue to look very positive for bean oil as renewable biodiesel capacity trends higher.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Dana Mantini can be reached at Dana.Mantini@DTN.com

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