Technical Analysis #C-WHEAT : 2017-03-24

Higher Egyptian wheat imports should support wheat prices

Egyptian wheat consumption and imports are forecast to rise in next season. Will the wheat price continue falling?

Egypt’s wheat imports will rise next season after a single body, the General Organization for Export and Import Control, is put in charge of inspection of wheat cargoes both at origin and arrival, US experts said. In the past season international sellers refrained from bidding for Egyptian state grain tenders for months due to uncertainty over acceptable levels of the ergot grain fungus. The Government of Egypt restructured its import procedures and importers now need to engage with one organization instead of having to deal with up to three governmental bodies. Wheat consumption is estimated to rise by 1.5% in 2017-18, to 20.00m tonnes, and Egyptian wheat imports are forecast at 11.5m tonnes, up 0.5m tonnes year-on-year. Expected increase in consumption and import in the world's top buyer should support wheat prices.

On the daily timeframe WHEAT: D1 is falling after rising to six month high in mid-February. The 50-day moving average MA(50) is verging on 200-day moving average MA(200), and crossing below it will form a bearish Death cross pattern.

• The Donchian channel gives a bearish signal: it is tilted downward.

• The Parabolic indicator gives a sell signal.

• The MACD indicator gives a bearish signal.

• The stochastic oscillator is in the oversold zone and is edging higher, this is a bullish signal.

We expect the bearish momentum will continue after the price closes below the lower Donchian boundary at 427.0. It can be used as an entry point for a pending order to sell. The stop loss can be placed above the last fractal high at 447.2. After placing the pending order the stop loss is to be moved following Parabolic signals. Thus, we are changing the profit/loss ratio to the breakeven point. If the price meets the stop loss level (447.2) without reaching the order (427.0), we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Technical Analysis Summary