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Wheat (WHEATHD:KCBT) 970c

The commodity markets started the year strongly, partly due to lower confidence in equities, but mostly to bullish fundamentals.

We are already long on soybeans but US wheat, which touched record highs in mid-December, has dipped slightly, and we see this as a strong case to get on board and reap some profits.

Demand is still strong, and some key producer countries, namely Australia and Canada, have been hit by dry weather. Also, China’s decision to impose taxes and quotas on its exporters, in a bid to control price inflation, will see the price shoot up in the region, and the struggling dollar justifies buying in the US.

Looking at the technical picture, the obvious resistance level at 1000c has a strong psychological significance, but there should be plenty of support at 900c. Go long, looking for a move above that resistance level, which could see the price shoot even higher amid strong fundamentals.

ACTION:

BUY Wheat • Target price 1067c • Stop loss 920c

TIME TARGET: 6 WEEKS