I am curious about the rationale behind taking the rough rice position, beyond the 1000D EMA which shows support in the region of $15. Despite El Niño, according to the FAO latest report July 7 (https://www.fao.org/worldfoodsituation/csdb/en/), there is no supply/demand imbalance in spite of a lower 2022/2023 production. After a slight draw on stocks for the current harvest season, they are due to increase in 2023/2024 as well as worldwide production (same forecasts from the USDA https://www.ers.usda.gov/webdocs/outlooks/106909/rcs-23f.pdf?v=4882.7).

Eoin Treacy's view

Thank you for this question which may be of interest to other subscribers. India is talking about restricting exports to control inflation. Pakistan’s ability to export was impacted by the floods last year. The heat in Texas this year may damage the crop even if this summer is wetter than the last few years. That suggests to me that predictions of a jump in supply are overly optimistic.

Meanwhile the decline in the first half of the year probably priced in the best of the supply enthusiasm. What caught my attention is rough rice has held a sequence of higher reaction lows since 2015. It is currently firming from the region of the 1000-day MA, so I view that as a relatively low risk entry point. With the position in the money I have now placed a breakeven stop so events will unfold without stress on my behalf.

I am considering initiating a position in wheat. Russia is shelling Odessa. The city has largely been spared from the war but is the subject of retribution for the bombing of the bridge to Crimea. Since Odessa is one of the primary exit points for Ukrainian wheat, that raises questions about the security of the export infrastructure.

The price is rebounding from upper side of its base formation and has confirmed a higher reaction low. 

Oats has also broken higher following a deep decline.