Paris-Traded Wheat May Hold at 245 Euros: Technical Analysis

Paris wheat futures may halt a two- week decline at a level of 245 euros ($324) a metric ton after falling below a support level of 255 euros three days ago, according to technical analysis by Cedric Weber, an analyst at France’s Offre & Demande Agricole.

The level implies a 1.3 percent drop from yesterday’s close. The attached chart shows that would be a 38.2 percent retracement of the rally from May 7 to Sept. 11, one of the levels singled out in so-called Fibonacci analysis.

“We made a big move breaking through the 255,” Weber said. “The technical risk is that we’ll drop to 245 euros. It’s a level where there was some consolidation at the start of July and we sought it again at the end of July.”

Wheat prices have climbed this year as drought in Russia and Ukraine reduced supplies, with the active contract on NYSE Liffe advancing 27 percent. The grain is on track for its biggest monthly drop since September 2011 amid concern the price jump will curb demand.

The level of 245 euros may be reached within the next two weeks and could become a level of “consolidation” for prices, according to Weber. He said the year-end holiday period will mean relatively little new information to drive the markets.

“There’s a lack of bullish information,” Weber said. “Stock estimates have increased. The second thing is that U.S. exports of wheat have been bearish.”

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices tend to drop or rise by certain percentages after reaching a high or low.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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