CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

WHEAT

Market Opportunities - 25/08/2022

25 August, 2022

The example below uses Contracts For Difference (CFDs). Calculations are only on the price of the specific instrument on the date below and calculations indicate a possible opportunity for profit or loss. No representation or warranty is given as to the accuracy or completeness of this information, consequently any person acting on it does so entirely at their own risk.

WHEAT weekly uptrend opportunity based On 1.00 Lot Calculation:

GLOBAL WHEAT MARKET SHARE:

  • LARGEST WHEAT PRODUCERS (OF TOTAL PRODUCTION EXPECTED IN 2022: 774.8 MILLION TONES): China at 17%, European Union at ~17%, India at ~14%, Russia at ~10%, USA at ~6.4% and Ukraine ~3.4%.
  • LARGEST WHEAT EXPORTERS OF TOTAL 183.8 MILLION TONS (2020/2021): Russia at 23.9%, Canada at 12.44%, USA at 12.24%, France at 10.30% and Ukraine at 8.9%.
  • RUSSIA + UKRAINE SHARE at ~30%: Russia and Ukraine would make around 33% of total global exports.

RUSSIA- UKRAINE WAR AND RUSSIA AGAINST THE WEST ECONOMIC WAR:

  • EUROPE ROLLS BACK SANCTIONS ON WHEAT DUE TO EXTREME DEMAND: The United States and the European Union opted to roll back sanctions on Russian grain exports and Fertilizer product. Despite the rolling back of sanctions, wheat supplies are still anticipated to be low.
  • EVERY SECOND TO THIRD PIECE OF BREAD IN AFRICA AND THE MIDDLE EAST IS PRODUCED FROM UKRAINIAN WHEAT: According to the Global Hunger Index, 47 countries had higher level of hunger in 2021, and the war in Ukraine could bring this number to more than 60 countries in 2022.
  • UKRAINIAN WHEAT PRICES ARE DOWN 40% SINCE THE BEGINNING OF RUSSIA’S MILITARY OPERATION, THREATENING SUPPLY: According to reports, the declining prices of wheat in Ukraine will likely affect the future crop yields, which will drive prices higher on the global markets.
  • LOGISTICAL PROBLEMS STILL EXIST FOR GETTING WHEAT TO UKRAINIAN PORTS: Despite the deal to export Ukrainian grain, there are still logistical problems getting the grain from the east to the port of Odessa. This will further affect the already thin global wheat supply.
  • RUSSIA WHEAT EXPORTS ANTICIPATED TO DECLINE HEAVILY: As of July 1, Russia forecasted to export 39 million tons of wheat for 2022/2023 season, which is still down around 11% from same period last year.
  • OTHER COUNTRIES THAT BANNED WHEAT EXPORTS: India, Egypt and Kazakhstan have all banned wheat exports.

CHINA HEAT WAVE:

  • CHINA HIT BY LONGEST AND STRONGEST HEATWAVE ON RECORD, SEVERLY AFFECTING CROP YIELDS. The current heatwave in China is still active, and has been going for 72 days and counting so far.

EUROPE HEAT WAVE:

  • EUROPE HAS SUFFERED ITS BIGGEST DROUGHT OVER THE LAST 500 YEARS, NEGATIVELY AFFECTING CROP YIELDS. According to recent weather forecasts, Europe has experienced severe drought that has covered about 47% of Europe.

RECENT PRICE ACTION:

  • WHEAT PRICES HAVE HAD A DOWNWARD CORRECTION OF AROUND 45.9% (FROM 1340 ON MARCH 4 TO 724 ON AUGUST 19). In early March, the Wheat prices rose to an all- time high of 1340. Wheat traded last around 789, and if a full recovery happens, it could provide an upside potential of around 70%.

WHEAT, August 25, 2022
Current Price: 789

Wheat

Weekly

Trend direction

UP

Resistance 3

1,090

Resistance 2

950

Resistance 1

880

Support 1

715

Support 2

695

Support 3

620

Example of calculation base on weekly trend direction for 1.00 Lot1

WHEAT

Pivot Points

Resistance 3

Resistance 2

Resistance 1

Support 1

Support 2

Support 3

Profit or loss in $

30,100.00

16,100.00

9,100.00

-7,400.00

-9,400.00

-16,900.00

Profit or loss in €2

29,637.65

15,852.70

8,960.22

-7,286.33

-9,255.61

-16,640.41

Profit or loss in £2

25,134.86

13,444.23

7,598.91

-6,179.33

-7,849.42

-14,112.26

Profit or loss in C$2

39,350.33

21,047.85

11,896.61

-9,674.17

-12,288.81

-22,093.71

1. 1.00 lot is equivalent of 100 units

2. Calculations for exchange rate used as of 11:00 (GMT+1) 25/08/2022

Fortrade recommends the use of Stop-Loss and Take-Profit, please speak to your Client Manager regarding their use.

  • You may wish to consider closing your position in profit, even if it is lower than suggested one
  • Trailing stop technique can protect the profit – Ask your Client Manager for more detail
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