See on the daily bar chart for July soft red winter wheat futures (ZWN25) that prices are now just above solid technical support levels that have stopped price declines the past several months. See, too, at the bottom of the chart that the Relative Strength Index is now in oversold territory (below 30.0) and is also very near levels that in the past few months have signaled near-term market bottoms are in place.
Fundamentally, the USDA reported this month that drought in U.S. wheat regions remains a concern, particularly in HRW-producing areas. “Approximately 32 percent of overall U.S. winter wheat production is estimated to be in areas of drought as of April 8,” said USDA. This is up slightly from 24% as of March 4 but well above the same time last year (15%). Drought conditions have improved a bit during the last part of April but are still a significant concern.
