Wheat Futures (NYSE: ZW) surged over 6% higher on Monday after Russia intensified its attack on Ukraine, shelling the capital of Kyiv during the early morning hours.
The escalation comes after an explosion on Saturday damaged President Vladimir Putin’s strategic bridge — the Kerch Bridge that connects the Russian mainland to annexed Crimea. Russia considers the assault against the bridge a terrorist attack.
Russia’s Deputy Chairman of the Security Council Dmitry Medvedev, vowed to kill those responsibile for the attack, saying “Russia can only respond to this crime by directly killing terrorists, as is the custom elsewhere in the world. This is what Russian citizens expect," according to a report.
At least four explosions hit Ukraine’s capital for the first time in months, renewing fears the war could affect grain exports out of the Black Sea.
Both Russia and Ukraine are key global wheat suppliers, and if the conflict continues to intensify, grain prices could soar, increasing food security issues for many parts of the world.
The Russia-Ukraine grain export deal is also set to expire next month, bringing into question whether the agreement will be renewed if Russia expands the war outside of the eastern area of Ukraine again.
Wheat futures in Chicago tapped $9.496 a bushel just before noon on Monday, reaching the highest price since June 29. Wheat futures are up almost 28% since Aug. 18, reversing from a long downtrend that began in May.
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The Wheat Futures (ZW) Chart: After reaching a low of $7.43 a bushel on Aug. 18, ZW reversed course into an uptrend, making a series of higher highs and higher lows on the daily chart.
The most recent higher low was formed on Friday at $8.72 and the most recent higher high was printed at the high-of-day on Monday.
- ZW’s uptrend is taking place within a rising channel pattern on the daily chart, between two parallel trendlines. The pattern is considered to be bullish unless a security breaks down from the lower ascending trendline on larger-than-average volume.
- Longer-term, ZW may be setting up to form a large cup-and-handle pattern on the daily chart, with a rounded bottom forming between the retracement beginning June 15 and the upswing that started on Aug. 19. If ZW breaks down from the rising channel pattern, bullish traders can watch for a downward sloping handle to print on decreasing volume, which could indicate the bullish cup-and-handle pattern will print.
- ZW has resistance above at $9.39 and $10.34 and support below at $8.73 and $8.11.
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