On Friday, US wheat futures hit a fresh two-month high driven by the prolonged Russia-Ukraine war alongside the lingering dry weather conditions in Argentina and the United States.
At the time of writing, the price of wheat contracts for December delivery was trading higher by 0.28% to $911.50 per metric ton.
Consequently, the Chicago Board of Trade (CBOT) futures increased by $0.07 to $9.10-¾ per bushel, near its record high of $9.22-½ last July 11.
The commodity shrugged off pressure from disappointing weekly US export sales and growth in 2022/23 global production estimates from the International Grains Council.
Furthermore, market participants are focused on fears of further disruptions to the Black Sea grain trade that has been partially re-established by a shipping corridor from Ukraine.
On Wednesday, Russian President Vladimir Putin ordered the country’s mobilization to combat Ukraine and hinted that he was prepared to utilize nuclear weapons any time.
Adding to wheat’s bullish movement is the production cut of Argentina’s Rosario grains exchange due to the prolonged drought in the region.
Likewise, dry conditions are affecting the southern plains in the United States, where farmers are planting the 2023 wheat crop.
According to the US Drought Monitor, there are extreme drought conditions in 53.00% of Kansas, which is the nation’s leading winter wheat state. This latest data is higher than the previous week’s 42.00% record.
Technical Analysis
On the technical side, wheat traverses the support level of $907.50 and the resistance zone of $912.90 on Friday’s trading session.
Besides, it has a positive Moving Average Convergence Divergence (MACD) reading of 2.95, which translated to a buy position.
Moreover, the asset’s 200-day simple moving average and 200-day exponential moving average sit at $866.37 and $866.62, lower than the current price, marking a bullish movement.
In addition, wheat has a Fibonacci retracement swing low of $906.96 and swing high of $914.76, with a pivot of $914.76.
