Russian Shipment Slowdown Spikes Wheat Futures

Wheat futures is reflecting the plight of the Russian Ruble, it seems. Since the ruble is spiraling downward, increasing the costs for food items – mainly bread – the Russian government is taking measures to slow the release of grain from its ports, which in turn is sending wheat futures prices at the Chicago Board of Trade to wheat prices not seen since May.

A Russian spokesperson stated today their country’s “main goal is to replenish the domestic market” and they are reportedly doing this by interfering with the certificates needed by grain buyers and sellers once sanitary inspections have been completed. At the same time, Russia’s president has warned his countrymen this current economic crisis could drag on for as long as two years, so this might provide a better understanding of their fight to ease sky-rocketing food prices.

It’s understandable for a sovereign nation to help stem food inflation,” said Jeff Evans, a Senior Broker and Vice-President of the Managed Accounts Division for RMB Group in Chicago, sharing his fundamental analysis insight regarding the current wheat futures situation. Evans added, This current leg up in wheat futures has been due to the economic crisis they’re experiencing (in Russia). Fear and uncertainty always plays a big role in price spikes.”

Wheat futures trend is up with no top yet in sight. I would prefer wheat futures to correct with a significant pull-back in price before getting back long, but I will look for other ways to enter as well.

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