Lower Demand Due To High Prices Dampening Gains In Wheat

Wheat declined from a 10-month high on speculation that rising prices, poised for the biggest monthly increase in more than three years, will curb demand and as a technical indicator signaled the rally may be excessive.

The contract for May delivery dropped as much as 0.8 percent to $7.0975 a bushel on the Chicago Board of Trade and was at $7.1125 by 2:18 p.m. in Singapore. Prices reached $7.185 yesterday, the highest since May 13. Futures jumped 18 percent in March, set for the biggest monthly climb since July 2010.

The grain jumped 30 percent through yesterday since closing at $5.515 on Jan. 29 amid shipping delays in Canada and turmoil in Ukraine and as crop conditions deteriorated in the U.S., the world’s biggest shipper. Wheat’s 14-day relative strength index rose to 73.3 yesterday, the highest since July 2012. Readings above 70 indicate to analysts who study technical charts that prices may drop.

“The market thinks that at these levels there’s a fair bit priced in for any weather concerns, in the U.S. primarily,” Paul Deane, an analyst at Australia & New Zealand Banking Group Ltd., said by phone from Melbourne today. “There’s a reasonable risk that it consolidates near-term.”


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu