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The last six months have not been kind to wheat, as the price has collapsed from £1.86 down to lows of £1.50 in London trading.
The chart below clearly highlights the support that wheat finds when it gets down to the £1.50 level, as the double bottom continues to develop. That being said, the downward trend the grain has been in over the last six months looks set in place, and arguably will require something beyond the recent norms to break this trend.
News flowing from China indicates that the government, in an effort to curb internal price rises, will look to sell some of its stockpiled supply and encourage state-owned companies to import from cheaper overseas markets. This could create a twofold improvement in global demand, firstly from the state-owned firms but secondly from the Chinese government after it has depleted its stockpiles. As with all issues that revolve around the Chinese government, there is plenty of room for misinterpretation, and we are some way away from these rumours turning into facts. Nevertheless, the markets obviously believe that once again support should be found at these levels.