WHEAT is a grain crop, one of the world’s top cereal grains. Generally, wheat is produced and consumed in the same country. However, an active expansion of international trade facilitates growth in wheat exports and imports. Demand for the product depends on the end user’s food preferences.
The most active traded wheat futures contract is the soft red winter wheat futures traded on the Chicago Board of Trade (CBOT). This class of wheat requiring humid climate is grown in the state of Texas and in the eastern United States. Soft red wheat is used to make cake flour.
Along with soft red wheat, hard red wheat (the Kansas Board of Trade) and hard red spring wheat (the Minneapolis Board of Trade) futures contracts are traded on the U.S. Stock Exchanges.
Wheat futures contracts are referred to as WHEAT on the Chicago Board of Trade under the ticker ZW. One futures contract represents 5,000 bushels of wheat which amounts to 136,0775 metric tons. The quotes are given in the U.S. dollar.
The price of the wheat futures contracts depends on a number of seasonal factors. The market shows the highest degree of uncertainty about a future harvest during the sowing and germination time. The situation becomes clearer closer to the harvest time. This is the reason why the wheat futures contracts show a steady change in prices throughout the period.
There is a tendency on the Chicago Board of Trade that wheat futures show rally during the sowing time, and its peak falls on its ending. This mirrors traders’ uncertainty about the future harvest. After successful completion of sowing, the price of the wheat futures contracts gradually decreases.
The next hike takes place in April due to the risk of late frost or drought which can spoil young crops during coming out into ear. After that and before harvesting, the price decreases again until the next sowing time starting in September when the cycle begins again.
You must take into account seasonal factors. Moreover, only if you understand all risks associated with each stage of wheat production, you can make an accurate forecast. Besides, you should have in mind that seasonal factors can be neutralized by other influencing events.
There was a case that wheat futures prices didn’t soar because of a considerable accumulation of wheat stockpiles at the end of the year. This is because the balance between supply and demand makes a significant impact on the prices of wheat.
You need to have in mind that if last year’s harvest is low than the price of the futures doesn’t fall after wheat has come into ear. Although the above described cycle from seeding to harvesting is rather stable as the past experience shows this doesn’t mean that it will be always like that. A fundamental picture is much wider this is why you have to consider other events on the market that can either facilitate or weaken the above described seasonal cycles.
If you trade the wheat futures contracts, you have to follow the data released in Weekly Crop Progress Reports every Monday.USDA US and World Supply & Demand Report is released on the 11th calendar day of every month.
These reports influence the price of futures. After their release, there can be significant fluctuations on the market.
Along with analysis, you can use binary option strategies allowing you to reduce risks and make investments more reliable.
How to Make a Profit on WHEAT
The fastest and most profitable way is to buy an option on wheat because you can make up to an 80% profit in just half an hour or even 10 minutes.
To make a profit on a binary option on wheat, you just need to forecast a price movement, that is, whether it will rise or fall during a chosen period.
I browse the broker’s webpage and choose WHEAT as an underlying asset. Then, I clicked on CALL or PUT button, set expiration and the amount investment.
If the price behaves in line with my forecast during that period and drops even by a pips, I will make an 80% return.
To make a profit on a commodity like Wheat is not difficult at all. Don’t miss the chance to earn on the most popular commodities like wheat, oil, gas, gold, sugar, coffee…They are really affordable to you due to binary options and 24option and TopOption.