Ignore the Panic Over Falling Crude Oil Prices and Buy July SRW Wheat Here

July soft red winter wheat (ZWN26) futures present a buying opportunity on more price strength.

See on the daily bar chart for July soft red winter wheat futures that prices have sold off the past week, with much of the pressure coming from the big downdraft in crude oil (CLM26) prices. It’s my bias that grain markets overreacted on the downside to the big drop in crude oil prices. Falling crude oil prices can actually be argued as being price-friendly for grains from a global demand perspective. Lower oil prices mean better global economic growth, leading to better global demand for grains. Also, the global supply and demand balance sheet for wheat favors the bullish camp, especially with this year’s U.S. winter wheat crop likely suffering some weather-related damage.

A move in July SRW wheat futures above chart resistance at $6.20 would give the bulls fresh strength and it would also become a buying opportunity. The upside price objective would be $6.85, or above. Technical support, for which to place a protective sell stop just below, is located at $5.95.

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 

Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.