ZW 2nd Leg of BO possibleShort term trade looking for 2nd Leg of BO after nice risk level established
Not wanting FBO price action.
Wanting some solid follow through bars within 3 bars
ZW1! trade ideas
Wheat looks supportedWheat made a significant low in Q1 and in line with many other commodities is now pushing higher thanks to the Fed criminals not having done enough QT. Would add to longs on pullbacks to $6.50.
Extreme Weather Sends Wheat Prices SurgingWheat plays a critical role in global agriculture and trade. Extreme weather has turned wheat prices bullish, rising more than 22% in a month after having languished for more than two years.
After reaching their lowest level in more than three years in March 2024, prices have rebounded strongly. Wheat rally is driven by extreme weather events in multiple places compounded by supply-demand imbalances.
Wheat rally is far from over. The May 2024 WASDE report painted a surprisingly positive outlook for wheat, suggesting an increase in US production. Outlook may be too optimistic, making revisions likely. Prices face risk to the upside once weather impact is comprehensively reassessed.
This paper posits a long position in wheat options benefiting not only from price appreciation and from expanding volatility.
WASDE PAINTS A POSITIVE WHEAT OUTLOOK
Recent WASDE report provides initial forecasts for 2024/25 marketing year (MY24/25) and updates projections for the current MY. These updates are crucial for estimating ending stocks which will be carried over to the next year.
Global production is expected to grow 1.3% in the upcoming MY to 798.19MT. Projections are even more optimistic for the US crop. USDA expects US wheat production in MY24/25 to be 3% higher YoY and total supplies to be almost 6% higher YoY.
Source: USDA
WHEAT CROPS ARE GETTING IMPACTED BY SEVERE WEATHER
Russia is the largest wheat exporter commanding 24% of total global exports. Russia has been hit by severe frost and cold.
Three of Russia’s key grain producing regions have declared a state of emergency, stating that May frost has caused severe damage to crops, reports Reuters . This year’s crop output will be lower. Frost linked damage follows record hot April which also harmed wheat crops.
The USDA has reduced its outlook for Russian wheat production by 3.5MT which might be an underestimate given widespread damage. WASDE report was released merely two days after Russia declared emergency, leaving USDA with little to no time to assess the impact.
STOCKS-TO-USE NEAR ALL-TIME-LOW
Data Source: PSD
Stocks to Use levels at major wheat exporters is currently at a 16-year low at 13.8%. It is expected to drop further to a record low of 12.4% in the upcoming MY24/25.
Low stocks-to-use ratio suggests that supplies are tight. Ending stocks are low relative to total consumption. Low stock-to-use ratios make prices extremely sensitive to minor shocks in physical markets.
MANAGED MONEY HAVE REVERSED COURSE ON WHEAT BEARISHNESS
Sentiment is shifting rapidly. Asset managers have been net short on wheat futures since 2022. This trend has reversed sharply over the last month with asset managers cutting short positioning by 70%. Net short positioning is at its lowest level since October 2022. Last week, asset managers continued to reduce their short positioning (down 35% over the past month) while also increasing their long positioning.
Source: CME QuikStrike
Bullish sentiment prevails with a put/call ratio of 0.57 in wheat options. Calls dominate both near-term and later contracts. Recent options market trading has been bullish for later expires.
Despite strong rally, implied volatility is lower than the levels seen last year and even during late 2022 signalling potential IV expansion.
Source: CME CVOL
HYPOTHETICAL TRADE SETUP
Wheat faces multifaceted upside risks stemming from weather-driven uncertainty and damage which may not have been factored into USDA’s supply outlook. Wheat supply also faces the risk of disruption from record low stocks-to-use ratio.
Wheat prices are up 22% over the last one month. A long futures position may be impacted negatively by a near-term correction. Instead, a long call position offers limited downside and substantial upside from expanding volatility and rising prices.
TradingView recently launched options suite brings traders a raft of options analytical tools. Wheat options chain can be visualised clearly.
Options IV across a range of expiries to identify key strike levels can also be visualised.
Strategy simulator enables evaluation of various strategies intuitively by visualizing the payoff based on not only price but also expansion or contraction of IV or time-decay.
The above hypothetical trade setup shows the payoff for a simple long call position in OZWU24 contract expiring on 23/August at a strike price of 750.
The premium for this option as of 17/May stood at 33 cents/bushel which results in a premium of USD 1,650 for a full options contract consisting of 5,000 bushels.
The above position breaks even at USc 783. If IV expands by 2%, the position would break even at USc 778.
Assuming constant IV, the:
• trade delivers profit of 1,850, if prices rise to 820.
• option expires worthless leading to a loss of 1,650 if prices remain below strike.
The options simulator features simple and intuitive interface enabling visualization of common options strategies. The tool also enables users to easily create and customize trading strategies.
Alternative to a long call, the bull call spread provides a pre-determined maximum profit and loss. The long call benefits from price rise and volatility expansion.
While short call offsets long call premium reducing potential losses. However, the profit potential is limited because any appreciation beyond the short call strike is negated by equivalent losses from the short position.
Bull Call Spread consists of a long call at a strike of USc 680 and a short call at a higher strike of USc 700. The width of the spread is set at 2 (700-680), a wider range can offer higher upside and reward/risk ratio, but it is only viable when the expected move is large.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Strong Buy opportunity on wheat futuresHello,
We've identified a current opportunity to buy wheat futures with a high probability and a favorable risk-reward ratio according to the weekly chart analysis.
Our target is set at $760 within a few weeks.
Ibrouri
Mistakes were made on wheat....In this video I go over my my mistakes I made when it comes to trading wheat and how I missed a critical piece of news that directly contradicted my thesis about questioning the narrative about weather concerns. CBOT:ZW1! AMEX:WEAT
Inflation & Agricultural Prices - On the Rise Again Inflation is expected to rise again because the prices of staples such as wheat, rice, corn, and soybean meal have been increasing over the last two months. Additionally, we've seen a 20% increase in soybean meal prices since the low in February.
Chicago SRW Wheat Futures & Options
Ticker: ZW
Minimum fluctuation:
1/4 of one cent (0.0025) per bushel = $12.50
Soybean Meal Futures & Options
Ticker: ZM
Minimum fluctuation:
0.10 per short ton = $10.00
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
It's time to reconsider...In today's video I explain why am reconsidering my previous bullishness after I reconsidered the long term technical and fundamental resistance. Technical factors such as long term resistance and fundamental factors such as high supplies in Russia, topped with weak demand and questioning the narrative about the actual effects of the recent dryness concerns in the U.S and Russia. Stay tuned for more! CBOT:ZW1!
Wheat: double top or more to come?Concerns over weather and the potential for climate anomalies have seen a bullish trend in wheat recently. However and as analysts are at pains to point out, fundamentals on the ground like ample supply are still bearish.
But now that wheat has broken through the 200MA in white and consolidated, it's possible that bullish sentiment may remain into the new week. A break back under the 200 that then becomes resistance again will mean that this was another double top, similar to June-July and December 2023. But TA-wise, if the price can stay above the 200 daily until the 50MA catches up, then climate concerns and a golden cross may rally bulls towards the weekly 200MA.
Not financial advice.
wheat long idea_wheat has a seasonal tendency to break highs may 7th to june 8
_high time frame p03 , with 3month , 1month agree to see higher prices
_looking for a retrace into equalibrium or OTE to take an entry, trading short term bursts long and following to targeted area
Wheat vs 200MA: can it hold?Rain forecasts in Russia have led to profit taking in wheat, but the question remains how bullish (as opposed to short covering) was this rally? If the price can keep its head above the 200MA, TA-wise longs may be worth accumulating.
While professional analysis points out that wheat's fundamentals in terms of oversupply are still very bearish, and thus an opportunity to sell down the rally and possible double-top if the 200MA wins out, it's worth keeping in mind whether another set of fundamentals - increasing yearly odds of extreme climate events and anomalies - has been adequately priced in.
Not investment advice, der.
Look for quiet day on TuesdayIn the S&P 500, a quiet day is expected on Tuesday as the market focuses on Fed commentary coming out on Wednesday.
A cautious market structureAlthough there was a rally later in the day in the S&P 500 which implies buyers moving the market higher going into the close. The overall structure for Friday implies caution if you are on the long side. It's important that the market does not return to Friday's Lows on Monday to maintain momentum for continuation to new highs.
Wheat vs the Daily 200MAWheat has been in a price normalization phase after the potential catastrophe of Russia's full scale invasion of its democratic neighbor. Since June 23, bulls have made several attempt to break and hold the daily 200MA, shown in green circles above. The first four attempts can be read as two sets of double tops. Even if this rally can't hold the 200, chances of another double top are worth considering.
However, unlike the previous double top attempts on the daily 200, the 50MA in orange is turning up towards the 200 and thus a second attempt at a golden cross may not be far off. The 100MA, in light blue, is almost there already, though of less significance.
Record harvests aside, increasing climate anomalies and the depravities of wars of aggression suggest this market may experience volatility going forwards.
As with all my posts, this is not financial advice and you trade at your own risk.
Wheat: Bulls are Back! 🐂Wheat is once again showing its bullish side and is taking the first upward step out of the sideways movement of recent weeks. In the further course, the price should now continue the blue wave (c) and complete the superordinate wave A in turquoise. Following this, we expect a sell-off. Within the framework of our alternative scenario, however, it remains 37% likely that the price will once again fall below the support level at USX 495.25 in order to make a lower low of wave Alt. (b).
Wheat Holding at the PCZ of a Bullish Bat Aligning with SupportWheat 2 years after topping out at the PCZ of a Bearish Shark that initiated a downtrend in 2022, has now come back to the top side of the range wheat traded in between the years of 2016 and 2020 before ultimately confirming the bottom at the PCZ of a Bullish Deep Gartley in 2019 and breaking free to the upside of the trading range in late 2020.
Now that wheat has found its way back down here at this previous resistance zone, we can see that it has formed a Bullish Bat structure on the way down which aligns with the old resistance and that it is currently attempting to be supported by the 200-period moving average on the 2-week timeframe. We can likely assume that as the Baltic Dry Index continues higher, wheat will regain it's 2021 highs along with many other agricultural goods and that this will have an inflationary effect overall.
In the related ideas section I will leave a setup for BDRY which is the ETF that tracks the Baltic Dry Index and I will also leave the DBA which is an ETF that holds the futures contracts for various different agricultural goods such as corn, wheat, sugar, and more related items. I will also leave setups for two Dry Bulk and Containership Charterers.
Lastly I will provide my harmonic Inflation Rate projections.
Wheat Market And The Potential Catalysts Building UpIn this video I go over one of my favorite markets the Wheat market and its current conditions and it's developing stories from dryness in the Kansas City Area a major producer of HRW wheat to war torn Ukraine and potential disruptions there. And with a market that is very heavily shorted by large managed money speculators this leaves a market very vulnerable to sharp short covering spikes like we saw today. Overall I would still be careful I am personally am waiting for a retest of the current breakout but with us closing above the 50 day moving average and some potential catalysts beginning brewing I believe there could be opportunities that the majority of people will just shrug off. So stay tuned for more I defiently plan on making more videos about wheat and corn and feel free to message me I am always trying to learn more!
CBOT:ZW1! CBOT:KE1! CBOT_MINI:XW1! CBOT_MINI:MKC1! AMEX:WEAT
Can wheat break above previous trendline support?Wheat
Technicals (May)
Wheat futures shot higher overnight but got stonewalled by what was previously trendline support (now resistance). A failure to close out above 550-555 keeps the Bear camp in control with a potential retest of the lows still in play. Further escalation in the Middle East could turn the tide back to Bullish.
Bias: Neutral/Bearish
Resistance: 573 1/2-575***, 595 3/4-600***, 608 1/2-611**
Pivot: 550-555
Support: 537-540***, 525**
Fund Positioning
Friday's Commitment of Traders report showed Funds were net buyers of about 5.4k contracts. That trims their net short position to 86,568 contracts.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
Below is a look at price averages for July wheat, using the 5, 10, 15, 20, and 30 year averages. Historically this isn't the most friendly time of year.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Wheat Breaks Below SupportWheat
Technicals (May)
May wheat futures broke lower yesterday, after struggling to maintian price action above trendline support in the previous two sessions. This has the Bear camp back in the driver’s seat as we officially enter the back half of the week. A close back above 550-555 would neutralize the recent bearish action.
Bias: Neutral/Bearish
Resistance: 573 1/2-575, 595 3/4-600, 608 1/2-611**
Pivot: 550-555
Support: 537-540*, 525
Fund Positioning
Friday’s Commitment of Traders report showed Funds were net buyers of about 5.4k contracts. That trims their net short position to 86,568 contracts.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
Below is a look at price averages for July wheat, using the 5, 10, 15, 20, and 30 year averages. Historically this isn’t the most friendly time of year.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Wheat Futures Riding a Fine LineWheat
Technicals (May)
May wheat futures traded in a wide range yesterday, on both sides of unchanged. This morning, prices are attempting to firm as the market revisits our pivot pocket from 550-555. The Bulls will want to see consecutive closes back above this pocket to spur a move back towards the recent highs. A failure to do so could put the Bears in the driver's seat.
Bias: Neutral
Resistance: 573 1/2-575***, 595 3/4-600***, 608 1/2-611**
Pivot: 550-555
Support: 537-540***, 525**
Fund Positioning
Friday's Commitment of Traders report showed Funds were net buyers of about 5.4k contracts. That trims their net short position to 86,568 contracts.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
Below is a look at price averages for July wheat, using the 5, 10, 15, 20, and 30 year averages. Historically this isn't the most friendly time of year.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT wheat down on good crop conditions, forecast for more rainChicago Board of Trade (CBOT) wheat futures declined for a second straight session on Tuesday after the U.S. Department of Agriculture (USDA) rated the winter crop at its highest early spring level in five years.
-The market was also pressured by crop-boosting rains forecast for the southern U.S. Plains wheat belt and by limited U.S. export demand due to cheaper grain offered by rival suppliers.
-CBOT May soft red winter wheat ended 11-3/4 cents lower at $5.45-1/2 a bushel.
-K.C. May hard red winter wheat fell 12-1/4 cents to end at $5.63-1/4 per bushel, and MGEX May spring wheat MWEK24 ended down 7-1/4 cents at $6.27-1/2.
-The USDA on Monday said 56% of the U.S. winter wheat crop was is good to excellent condition, the highest for this time of the season since 2019.
-India has asked global and domestic trade houses to avoid buying new-season wheat from local farmers to help the government-backed Food Corporation of India procure large quantities to shore up its depleting reserves.
CBOT wheat rebounds on technical buying, short coveringChicago Board of Trade (CBOT) wheat futures rebounded on Wednesday after two sessions of losses as technical buying and short covering lifted the market.
CBOT May soft red winter wheat ended 10-3/4 cents higher at $5.56 a bushel. The benchmark contract fell to a one-week low early in the session but found technical chart support at its 20-day moving average.
Commodity funds hold a sizable net short position in CBOT wheat futures, leaving the market open to short-covering rallies.
A softer dollar was also supportive as it makes U.S. grains more competitive globally.
K.C. May hard red winter wheat settled up 17-1/4 cents at $5.80-1/2 per bushel after earlier falling to its lowest since March 6.
MGEX May spring wheat ended up 12 cents at $6.39-1/2 a bushel.
Wheat near significant bottom, inflation comingWheat has finished 5 waves down of the expanded flat structure that started in Mar 2008. The next up should be a rally to ATH. Inflation is coming.
CBOT wheat ends lower on higher crop condition outlookChicago Board of Trade (CBOT) wheat futures fell on Monday as traders expected the U.S. Department of Agriculture (USDA) to report the strongest winter crop ratings in eight years in a weekly report due for release later in the day.
Wheat futures were also pressured by large global stocks and limited U.S. export demand as rival suppliers are offering their shipments at lower prices.
CBOT May soft red winter wheat ended 3-1/4 cents lower at $5.57 a bushel.
K.C. May hard red winter wheat fell 9-3/4 cents to end at $5.75-1/2 per bushel, and MGEX May spring wheat ended down 10-1/4 cents at $6.34-3/4.
The USDA is due to release its weekly crop condition estimates at 3:00 p.m. CDT (2000 GMT). Reuters expect winter wheat to be rated 57% good to excellent, which would be the highest for this time of the season since 2016.
On average, also expect the USDA to report spring wheat at 2% planted as of Sunday.
The USDA on Monday morning said export inspections of U.S. wheat in the week ended March 28 totaled 498,989 metric tons, above trade estimates for up to 425,000 tons.
