Russia and the EU may reduce wheat exports
In this review, we suggest considering the personal composite instrument (PCI) “Wheat vs the Russian Ruble”. It increases when wheat prices rise in the world market and the Russian currency weakens. Is there a possibility for the WHEAT/RUB to rise?
A few messages at once can indicate a possible reduction in the supply of wheat in the world market. According to the European Commission, exports of soft wheat from the EU countries in the 2018/19 agricultural season for the period from July 1 to November 11 amounted to 5.9 million tons, which is 24% less than the level of the previous season for the same period (7.8 million tons). According to the forecast of the Russian agency SovEcon, wheat exports from Russia in November of the current year will be reduced to 4 million tons, which is the minimum volume since July. According to the forecast of the Russian Institute for Agricultural Market Studies (IKAR), wheat exports from Russia in the current agricultural season will be reduced to 33 million tons, compared to 41.3 million in the previous season. This is caused by a decrease in yield. In turn, the weakening of the Russian ruble is observed against the background of declining oil prices. The share of hydrocarbons in Russian exports is approaching 75%. In addition, the Ministry of Finance of the Russian Federation announced that it is considering plans for the devaluation of the ruble to replenish the state budget.
On the daily timeframe, WHEAT/RUB: D1 overcame the resistance line of the short-term downtrend and returned to the long-term uptrend. The further price increase is possible in case of a reduction in the world wheat yield and the devaluation of the ruble.
Summary of technical analysis
Position Buy
Buy stop Above 35300
Stop loss Below 32900
In this review, we suggest considering the personal composite instrument (PCI) “Wheat vs the Russian Ruble”. It increases when wheat prices rise in the world market and the Russian currency weakens. Is there a possibility for the WHEAT/RUB to rise?
A few messages at once can indicate a possible reduction in the supply of wheat in the world market. According to the European Commission, exports of soft wheat from the EU countries in the 2018/19 agricultural season for the period from July 1 to November 11 amounted to 5.9 million tons, which is 24% less than the level of the previous season for the same period (7.8 million tons). According to the forecast of the Russian agency SovEcon, wheat exports from Russia in November of the current year will be reduced to 4 million tons, which is the minimum volume since July. According to the forecast of the Russian Institute for Agricultural Market Studies (IKAR), wheat exports from Russia in the current agricultural season will be reduced to 33 million tons, compared to 41.3 million in the previous season. This is caused by a decrease in yield. In turn, the weakening of the Russian ruble is observed against the background of declining oil prices. The share of hydrocarbons in Russian exports is approaching 75%. In addition, the Ministry of Finance of the Russian Federation announced that it is considering plans for the devaluation of the ruble to replenish the state budget.
On the daily timeframe, WHEAT/RUB: D1 overcame the resistance line of the short-term downtrend and returned to the long-term uptrend. The further price increase is possible in case of a reduction in the world wheat yield and the devaluation of the ruble.
- The Parabolic indicator gives a bullish signal.
- The Bollinger bands have narrowed, which indicates low volatility. Both bands are titled upwards.
- The RSI indicator is above 50. It has formed a small positive divergence.
- The MACD indicator gives a bullish signal.
Summary of technical analysis
Position Buy
Buy stop Above 35300
Stop loss Below 32900