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Charts show corn and wheat futures may continue to rise due to Russian-Ukrainian war, Kramer says

CNBC’s Jim Cramer said on Tuesday that corn and wheat prices could continue to rise due to Russia’s invasion of Ukraine, drawing on analysis by Carly Garner, senior commodities strategist at DeCarley Trading.

“The charts, as interpreted by Carly Garner, suggest that wheat and corn prices are rising here. Maybe much higher. And that’s the last thing we want to see, but we might have to get used to it.” Crazy money,” said the presenter.

Kramer said Ukraine and Russia account for a third of the world’s wheat production, and while this year’s crop was sown before war broke out between the two countries, harvesting and shipping could be a problem due to high energy costs and security concerns.

Wheat futures

Current prices are the highest since 2008, when a host of factors, including high oil prices and unusually dry weather in the United States, caused wheat to jump to $13 a bushel from the $3 to $6 it fluctuated for decades before, Kramer. said.

Garner thinks this jump was “even faster and messier,” Kramer said. Also, because futures exchanges have price caps on how much a commodity can move per session, wheat can be “capped up”, meaning the price has reached its cap for the day, and short sellers who don’t want to sell at limit price are held in this position until the next day.

The phenomenon occurred within a week of the start of the Russo-Ukrainian war, which Garner believes helped lift wheat prices to $13.60 with little trading.

Here is the weekly wheat futures chart and Commodity Futures Trading Commission trader commitment data. The COT report shows the net positions of small speculators, large speculators and commercial hedgers.

Here, Garner sees that because of the locked-up trading sessions, money managers are only 12,000 contracts net long, Cramer said. They could go as high as 50,000 in the past, Garner said, meaning “if institutional money managers want to bet on wheat here, they still have a ton of dry powder,” Cramer said.

Garner believes prices will continue to rise, Cramer said.

Here is the daily chart of May wheat futures:

Wheat futures fell sharply after prices peaked on March 8 and underwent six limit moves higher, Garner said. But prices still remained above the 20-day moving average of wheat, while the relative strength index, a momentum indicator, came out of the overbought zone, remaining positive. This means wheat has “more room to grow,” Cramer said.

“As long as it holds above its support level at $10.30 a bushel, down about 90 cents, Garner believes wheat could rise back to its highs in the coming weeks or months,” Cramer said.

Corn futures

Although Ukraine accounts for 4% of world corn production, “no trader wants to sell corn when wheat prices are rising,” Cramer said. He added that corn has been able to rise because corn-based ethanol is currently cheaper than oil, which has risen in price in recent weeks.

Here is the monthly chart of May corn futures:

Garner believes the corn rally may end soon but still be strong, Cramer said, adding that if corn futures break the resistance price ceiling around $7.70, they could approach record levels of $8.50.

“She doesn’t expect corn to break this level, but if she somehow manages to keep going up, then she won’t see any resistance until the $10.50 level. This will be a new record. If corn reaches this level, it means that we are dealing with an insane level of inflation,” Kramer said.

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