Trade issues have made the agricultural commodities to realize some of the biggest declines this year. After rising in the first few weeks of the year, agricultural commodities have turned south and are now seeing double-digit losses this year. The reason for this is that the US is one of the biggest agricultural producers in the world. It’s fertile plains in the mid-west, fertile soils, and good climate makes it an ideal supermarket of the world.

While commodities like corn and soybeans have fallen significantly, wheat has been an outlier. Year to date, the price of wheat has gone up by more than 25%. As shown below, any declines in wheat this year have been ideal buying opportunities.

Wheat is one of the most important commodity in the world. Every day, people from all corners of the world eat wheat-made products like bread and cakes. The rise in price this year is because of the expected crop yield. Data from the United States Department of Agriculture (USDA) show that most countries expect low crop yield. Top producers like the European Union, Ukraine, Australia, and Russia expect reduced output by 4.4 million tonnes, 1 million, 2 million tonnes, and 1.5 million tonnes respectively. There has also been drought in other countries like India and Pakistan. As production falls, the world population is growing which translates to more demand.

Wheat futures are now trading at $541.88. This price is close to the $572 level which was the highest level since 2017. It is also above the 100-day simple moving average. The RSI is currently at 61 and pointed to a higher rise. There is therefore a likelihood that the price of wheat futures will continue to rise and potentially test the $572 resistance level. Traders should watch out for this level and exit the trade once the price becomes overbought.

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