By IFCMarkets

Wheat prices rose ahead of the Egyptian state company GASC wheat purchase tender award decision. The lowest offer was slightly above the current prices. Will the global wheat prices continue increasing?

Wheat prices growth on Thursday partly bridged the difference between the Egyptian tender offers and the exchange prices. But additional factors contribute to the grain price growth. International Grains Council has downgraded its global outlook for the wheat production in agricultural season 2015/16 by 1mln tonnes to 726mln tonnes. The drought in the Black Sea region can cause the reduced crops there but the factor can be offset by US weather improvement. On the other hand, the demand on the US wheat was quite strong last week. Its export volume exceeded forecasts amounting to 550.3 thousand tonnes which is 54% more than last week and 86% more than the 4-week average. The US companies did not even participate in the Egypt’s tender.

On the daily chart Wheat: D1 is being in the uptrend for two months. The Parabolic gives buy signal. At the last candle it was accompanied by MACD. RSI has surpassed the level of 50 but is still far from the overbought zone. The Bollinger Bands have contracted which can mean lower volatility. The bullish momentum can develop in case the wheat prices surpass the last upper fractal and the Bollinger Band at 522. The level can serve the point of entry. The initial risk-limit can be placed below two last fractal lows, Parabolic signal, Bollinger band and the support of the uptrend at 486. Having opened the pending order we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 486 without reaching the order at 522, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Market Analysis provided by IFCMarkets