CNBC’s Jim Cramer said Tuesday that Russia’s invasion of Ukraine could continue to raise corn and wheat prices, based on an analysis by Carley Garner, senior commodity market strategist at Decary Trading.
“The charts interpreted by Curly Garner suggest that prices for both wheat and corn are higher here. Probably much higher. That’s the last thing we want to see, You may need to get used to it, “said the host of” Mad Money. “
Ukraine and Russia account for one-third of the world’s wheat production, according to Kramer, and this year’s crops were planted before the outbreak of the war between the two countries, but with high energy costs and safety. Concerns can make harvesting and shipping difficult.
Wheat futures
Current prices are the highest since 2008, and wheat was hovering decades ago from $ 3 to $ 6 to $ 1 due to many factors, including soaring U.S. oil prices and unusually dry weather. It jumped to $ 13 per bushel. Said.
Garner believes the jump was “faster and more chaotic,” Kramer said. In addition, on futures exchanges, wheat can be a “locked limit” due to price limits on the amount of goods that can be moved during a session. That is, prices reach the limit in one day, not shortsellers. If you want to sell at the limit price, it will be held in that position until the next day.
This phenomenon occurred a week after the war between Russia and Ukraine began. Garner believes he raised the price of wheat to $ 13.60 with few transactions.
This is a weekly chart of the Trader Data Commitment of the Wheat Futures and Commodity Futures Trading Commission. The COT report shows the net positions of small speculators, large speculators, and commercial hedgers.
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Here, Garner sees the money manager as netlong with only 12,000 contracts because the restricted trading session is locked. In the past, it could reach up to $ 50,000, according to Garner. So, “even if institutional investors want to bet on wheat here, there’s still a lot of dry powder left,” Kramer said.
Garner believes prices will continue to rise, Kramer said.
The daily chart of wheat futures for May is as follows.
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Wheat futures fell sharply after prices peaked on March 8 and were subject to six restrictions, Garner said. However, prices are still above the 20-day moving average of wheat, and the relative strength index, a measure of momentum, has receded from the overbought territory while remaining positive. This means that wheat “has more room to run,” Kramer said.
“As long as the bushel is $ 10.30, down about 90 cents from here, we believe wheat could rise again to its highest level in the coming weeks and months,” Kramer said. Stated.
Corn futures
Ukraine accounts for 4% of the world’s corn production, but “no trader wants to sell corn when the wheat board is lit,” Kramer said. He added that corn was able to recover because corn-based ethanol is now cheaper than oil, whose prices have skyrocketed in recent weeks.
The monthly chart for May corn futures is as follows:
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Garner believes the corn rally could end soon, but it could still hurt, and when corn futures exceed the resistance cap of $ 7.70, a record level of 8.50. He added that it could approach the dollar.
“She doesn’t expect corn to break through that level, but if somehow it can keep roaring, there’s no further resistance up to $ 10.50. It’s a new record. Let’s say that when corn reaches that level, it means dealing with insane levels of inflation. “
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