FxWirePro Call Review: Wheat price reaches target; final target further extended

In May, we at FxWirePro forecasted that the price of wheat is likely to rise by another 15 percent from the then current price of 466 cents per bushel as the price jumped by almost 12 percent from their worst level since September 2018 on President Trump’s assured assistance to farmers to counter China’s economic attack on U.S. farmers in response to the escalating trade dispute between the world’s two biggest economies and biggest trading partners.

• Price has declined sharply to 418 cents per bushel as the trade was escalated in May with both sides resorting to tariff war as President Trump hiked the tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent, and China responded by imposing tariffs on $60 billion worth U.S. goods.
• Then President Trump successfully placed floor with the promise of government procurement of Agricultural goods to support farmers affected by the trade war - the move we called is the ‘Trump’s put’.

Here is the put -

• “Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S.... ....The process has begun to place additional Tariffs at 25% on the remaining 325 Billion Dollars. The U.S. only sells China approximately 100 Billion Dollars of goods & products, a very big imbalance. With the over 100 Billion Dollars in Tariffs that we take in, we will buy..... ....agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance. In the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!”
• “We are right where we want to be with China. Remember, they broke the deal with us & tried to renegotiate. We will be taking in Tens of Billions of Dollars in Tariffs from China. Buyers of product can make it themselves in the USA (ideal), or buy it from non-Tariffed countries... ....We will then spend (match or better) the money that China may no longer be spending with our Great Patriot Farmers (Agriculture), which is a small percentage of total Tariffs received, and distribute the food to starving people in nations around the world! GREAT! #MAGA”

With a put like that, we suggested based on our calculations that the price of Wheat is likely to rise by another 15 percent and reach 545 cents per bushel.

The price has reached our forecasted target this week and after reaching 549 cents area, the price is currently down to 527 cents largely due to profit bookings.

Trade idea:

Our calculations suggest that the price is likely to rise by another 15 percent and reach our next forecasted target of 610 cents per bushel. The upcoming meeting between President Trump and President Xi of China on the sidelines of the G20 meeting would be decisive for the next move in Wheat price.